Contractor Success Map with Randal DeHart | Contractor Bookkeeping And Accounting Services

This Podcast Is Episode 563, And It's About Unlocking New Construction Clients And Markets For a business to thrive and grow, it needs a strategic plan and the ability to find new customers and continually tap into promising markets. However, this can be easier said than done in a highly competitive trade industry. With time, the quality of your work will speak for itself, which is the most valuable testimonial of all. While your good reputation preceding you is undoubtedly essential, there are a few other ways that you'll want to market your services to ensure that you have a steady stream of work. The untapped potential in existing markets Start by re-evaluating your existing customer base. Profiling them will help you more accurately define your target consumers.

Strategic Marketing is essential for any business to attract new clients, and the construction industry is no exception. Effective marketing strategies can help you reach your target audience and showcase your expertise. Some of these include:

• Utilizing Social Media to showcase your work and attract new clients
• Creating a professional website to showcase your services and expertise
• Using Search Engine Optimization (SEO) to improve your local online visibility
• Email marketing to stay in touch with potential clients and promote your services
• Advertising in local newspapers, magazines, or on radio or podcasts.
• Appear in directories: Ensure your business is on relevant trade directories in your area.

Personas: your marketing's best friend

Personas bring your target customers to life. If your service's ideal customer is a 40-year-old stay-at-home mom and a husband in the tech industry looking to update their kitchen, create a detailed profile reflecting their lifestyle, income, concerns, educational background, and other key demographics. The deeper your understanding of your target customer, the easier it will be to find others who fit the same profile.

Expanding your business horizons

Look at where your customer personas are located. Could different geographical regions hold potential for you? If so, conduct thorough consumer demand research in these locations. If the demand is significant, devise a strategy to serve these customers. This could mean extending your services to locations outside your city if the project will pay well.

Integrating vertically or horizontally

Depending on your current position in the market, you might find opportunities to expand by buying out competitors or partnering with complementary businesses to increase your reach and customer base.

Networking can help you build relationships with potential clients and other businesses in your industry. Attend industry events, join local business associations, and participate in community events to build your network

You can also consider partnering with other businesses or contractors to expand your reach and attract new clients.

The digital landscape: have an online presence

A robust website or a business page is a valuable way to reach more clients. A responsive website design could be beneficial if your business customers mostly found you through a Google search on their phone (that's why it's essential to ask how they found you during your first chat). Your website is your storefront, so make sure it's professional, easy to navigate, and highlights your services and expertise.

Increase visibility in the real world

Make sure your construction business's name and logo appear on any equipment you use, and make clothes for yourself or your crew to wear when they're out and about in the world.

It may be smaller than a billboard, but driving and walking around letting people know who you are, what you do, and how to contact you will go a long way to marketing your trade business. If people become familiar with your business name, they'll likely turn to you when needed.

Analyzing your competitors It's essential to know what your competitors are doing. By researching their marketing strategies, you can gain valuable insights into what works and doesn't in your industry. This can help you make informed decisions about your marketing efforts and stay ahead of the competition. One way to start is by analyzing your competitors' websites, social media profiles, and advertising campaigns. Look for patterns and themes in their messaging, branding, and target audience.

Re-evaluate your marketing strategy

What actions are you taking to attract new clients? Consider brand promotion through conferences or customer surveys. Enhance your online presence on relevant websites and social media platforms. Showcase your work, engage with your followers, and connect with potential clients.

You could even set up a formal referral program, as most customers will refer your business to others. Encourage satisfied clients to refer you to their friends and family, and consider offering referral incentives. You can also ask for testimonials and showcase them on your website and social media to attract new clients.

Consider offering promotions and discounts to attract new customers and encourage repeat business.

Exploring new markets

If you feel you've maxed out growth opportunities in your existing market, it might be time to cast your net wider. Perhaps your expertise could transfer to consulting or different sectors like B2B, which could be viable options. This could require some tweaking of your marketing approach and product offerings to cater to other pain points, problems, and priorities.

Partner with other businesses in your industry or outside but still relevant to what you do - like Real Estate Agents, Photographers, and Local Community Artists and Influencers, to offer joint promotions, share leads, and cross-promote each other's services.

In Conclusion

As a construction business owner, it's important to increase your local visibility, understand your target audience, and create a message that resonates with them. Of course, don't forget to measure your results.

Finding new clients and markets is an exciting journey that could unlock doors to business growth. It requires careful planning and strategic actions, but the rewards could be significant with the right approach.

P.S.

We offer free resources to help you save time and money that you can download and print now.

About The Author:

Sharie DeHart, QPA, co-founded Business Consulting And Accounting in Lynnwood, Washington. She is the leading expert in managing outsourced construction bookkeeping and accounting services companies and cash management accounting for small construction companies across the USA. She encourages Contractors and Construction Company Owners to stay current on their tax obligations and offers insights on managing the remaining cash flow to operate and grow their construction company sales and profits so they can put more money in the bank. Call 1-800-361-1770 or sharie@fasteasyaccounting.com

This Podcast Is Episode 562, And It's About Improving Productivity And Leadership Mentality As A Contractor As a construction business owner, improving productivity is essential to your company's success. But you may often find yourself pulled in different directions by competing responsibilities. At some point, we all experience that. Classifying tasks and tackling the most time-consuming ones can feel daunting. But why is it so hard for us to start – or even finish – seemingly insignificant tasks? Why do these tiny tasks become the bane of our existence, tempting us into procrastination limbo?

Let's explore why we get stuck on even the most minuscule duties and how that might hold us back.

Understanding the psychology behind procrastination

Procrastination plagues many people. It's a common problem that often leaves people feeling frustrated with themselves. But what if we could understand the psychology behind procrastination and use that knowledge to overcome it? At its core, procrastination is linked to negative emotions like stress, anxiety, and fear of failure. By avoiding or delaying a task, we temporarily alleviate these unpleasant feelings.

However, this relief is short-lived and ultimately only creates more stress. By being aware of this pattern and learning how to manage negative emotions, we can break free from the cycle of procrastination and become more productive.

Breaking down the task into small, manageable parts

When faced with a daunting task, it can feel overwhelming even to know where to start. However, the key is often found in breaking down the task into small, manageable parts. By dividing larger projects into smaller, more achievable tasks, we can focus our attention and energy on one step at a time, leading to a greater sense of progress and accomplishment.

Whether working on an estimate on a project or a personal goal, taking a moment to map out the necessary steps and tackle them individually can make all the difference in achieving success. So next time you're feeling stuck, take a breath and ask yourself: what's the next small step I can take?

Using rewards as incentives to get started

Sometimes, all it takes is a bit of extra motivation to get things done. That's where rewards can come in handy as an incentive to get started. Whether it's a tasty treat, a fun activity, or even some well-deserved relaxation time, a reward can give you that extra push to begin tackling a task.

Studies have shown that implementing a reward system can increase productivity and help you achieve your goals faster. So why not give it a try? Choose a reward that suits you and your task at hand, and see how much more motivated you feel to get started.

Finding out what your specific procrastination triggers are

Have you ever found yourself staring blankly at your to-do list, unable to muster the motivation to tackle any tasks? Identifying your procrastination triggers can be the key to overcoming it. Maybe certain types of tasks are more daunting to you, or you get easily distracted by social media or other forms of entertainment. Whatever it may be, pinpointing your personal procrastination triggers can help you create a strategy to combat them and finally get back on track.

Developing a plan and timeline for success

Success isn't something that happens overnight. It requires careful planning and a well-thought-out timeline. Whether it's starting a business or working towards a personal goal, having a plan in place is essential.

The first step in creating a successful strategy is to define your goals and establish the time frame you want to achieve them. It's crucial to take the time to map out the smaller steps needed to reach your ultimate objective and assign realistic deadlines to each of them. Along the way, it's also essential to evaluate your progress regularly and make necessary adjustments to your timeline or plan. With a clear strategy and timeline in place, success is within reach.

Planning to avoid distractions or delays

In our fast-paced world, distractions seem to lurk at every corner. The constant buzz of notifications, the temptation to check social media, and the never-ending stream of emails can quickly derail our day. The solution? Planning to avoid these distractions and any potential delays. By setting clear goals, creating a schedule, and arranging your workspace in a way that helps you focus, you can reduce the distractions that come your way and stay on track toward achieving your objectives. With some forethought and discipline, you can turn your day from one filled with distractions and delays to one of focused productivity.

Letting go of perfectionism and allowing yourself to make mistakes

Perfectionism is a trait that can drive people to do their best, but it can also become an obstacle to personal growth. The constant pressure to achieve flawlessness can lead to fear of failure and deflection, ultimately limiting your potential. Accept that mistakes are a natural part of the learning process, and they give us experience and insight that we wouldn't get otherwise. Embracing imperfection requires a shift in mindset, but by acknowledging our flaws and being willing to make mistakes, we can move forward with confidence and creativity.

How can this improve your Leadership Skills?

Construction Companies have two basic leadership styles: wait until an urgent situation occurs and react like a firefighter or develop business processes that allow the company to respond calmly and direct resources and solutions to the issues like a traffic police officer on a sunny afternoon.

Firefighter Leaders - Operate in one of three mental states:

• Going into a crisis
• Coming out of crises
• Waiting for a crisis

Traffic Director - Leaders operate in one of four mental states:

• Preparing for new projects to appear
• Preventing projects from becoming an emergency
• Planning for implementation of current and future projects
• Empowering others and directing the flow of projects to completion and billing

The Graph Below - Is similar to the diagram shown in The 7 Habits of Highly Effective People Habit 3: Put First Things First, by Stephen R. Covey, to demonstrate this principle.

As illustrated in the Time Management Matrix above, we spend our time in one of four ways. This matrix defines activities as Urgent / Not Urgent / Important / Not Important.

In conclusion

Ultimately, it is essential to remember that there is no one-size-fits-all approach to overcoming procrastination. People are inherently different and have different needs and motivations regarding goal setting and habit formation. The key is to be patient with yourself and accept that change takes time.

By determining which tasks are the most important to you and your construction business and scheduling your day based on those criteria, you can ease the pressure caused when you have a long list of activities to take care of. If bookkeeping is on your list, call me and let me know how I can help.

PS

We offer free resources to help you save time and money that you can download and print now.

About The Author:

Sharie DeHart, QPA, co-founded Business Consulting And Accounting in Lynnwood, Washington. She is the leading expert in managing outsourced construction bookkeeping and accounting services companies and cash management accounting for small construction companies across the USA. She encourages Contractors and Construction Company Owners to stay current on their tax obligations and offers insights on managing the remaining cash flow to operate and grow their construction company sales and profits so they can put more money in the bank. Call 1-800-361-1770 or sharie@fasteasyaccounting.com.

This Podcast Is Episode 561, And It's About Easing Your Back Office Burden One Payroll At A Time As a construction business owner, you have a lot on your plate. You need to manage your employees, oversee projects, ensure compliance with regulations, and keep your clients happy. Amidst all this, you may be tempted to handle your payroll to save costs and maintain control. At face value, it seems like a great idea. If you're a small business owner with just a few employees, you probably think hiring a payroll specialist is an expense you can avoid. You feel that you can handle it yourself. You intend to keep your staff paid right and on time. What could go wrong, right? Well, lots, actually. And before you know it, it's now a costly mistake, and you need to spend more money to make it right. Why doing your own company payroll is not a great idea: 1. Time-consuming Payroll processing is a time-consuming task that requires attention to detail, knowledge of tax laws, and expertise in accounting. As a construction business owner, your time is better spent growing your business and focusing on your core competencies. If you don't have a finance background, you'll likely spend a substantial amount of time calculating employees' work hours, computing taxes and other deductions, creating payslips, processing, and filing. And even if you have a bit of a background in bookkeeping, are you sure you want to spend your precious time doing these tasks instead of focusing on the core aspects of your business? By delegating payroll processing to a professional, you can free up time for strategic planning, marketing, and business development. 2. Risk of errors Payroll processing involves complex calculations and compliance with federal, state, and local regulations. Any payroll mistakes can result in penalties, interest, and legal liabilities. By outsourcing payroll to a professional, you can reduce the risk of errors and ensure compliance with regulations. A payroll specialist knows the ins and outs of taxes, overtime, contributions, sales commissions, and bonuses. The bottom line is that another professional can do it better, and while they're at it, you can get back to doing what you do best– like growing your business! 3. Costly mistakes Payroll mistakes can be costly for your business. For example, you may be subject to penalties and interest charges if you fail to withhold the correct taxes. Similarly, if you misclassify employees as independent contractors, you may be liable for back taxes, penalties, and legal fees. Sure, you can learn about relevant tax adjustments and benefits procedures if you want to. But then again, you'd be spending more time educating yourself, not to mention the possibility of making costly mistakes. Payroll processing requires expertise in accounting, tax laws, and compliance regulations. As a contractor, you may not have the time or resources to keep up with the latest changes in payroll regulations. A professional construction bookkeeper can help you avoid costly mistakes and protect your business from financial risks. You can benefit from their expertise and ensure compliance with regulations. 4. It's aggravating There's no denying that payroll processing can be stressful, especially when you don't know what you're doing. Reduce stress and spend more time on business activities that drive profits and growth. You can also eliminate the risk of burnout and improve your work-life balance. Better Practices Payroll is one of those things that starts simply enough. You create your construction business, outsource contractors, or hire part-time crew, and things tick along. It's straightforward and sufficient to keep everything in line at first, but what happens to most companies is that they grow! This is a great thing, but it also means that payroll becomes more complicated. As such an essential aspect of your business, payroll must run smoothly. Getting paid is, after all, the primary reason that most people come to work. Still not quite ready to outsource? How about try this approach: 1. Simplify Keep things as simple as possible wherever you can. One way to do this is by switching to direct deposit. This will drastically reduce the work put into issuing and tracking payments. 2. Schedule At least once per year, and preferably more, it's crucial that you (or your payroll professional) take some time to create a payroll calendar. Highlight any dates that may cause a lag in your employees' pay. It will also allow you to plan for any potential shortcomings or other issues arising from holiday closures or oddities in the calendar. Making a payroll mistake is a surefire way to lower employee morale, so it's essential to be aware of these dates ahead of time. 3. Automate The computer can be your best friend. Finding the right software to help with payroll can automatically take care of simplifying and scheduling, freeing up valuable time for your payroll specialist. It also eliminates the potential for human error in payroll processing and creates a crystal-clear picture of your finances. Many options are available these days that are easy to learn and straightforward to maintain. 4. Brush up Payroll rules and regulations can change frequently and for any number of reasons. It's important to stay informed on any changes in your region and proactively plan for them. A lot of time can go into correcting a payroll error, so know what's happening to avoid this. With more and more employees being hired remotely, it's also important to be aware of any regulations on those geographically located in a different area from your business. 5. Get help If hiring a full-time in-house payroll staff is impractical, you can always come to us and let us take care of your payroll. Whether you need weekly, fortnightly, or monthly processing, our team is flexible enough for you. As construction accounting specialists and payroll experts, we can make your employees happy with timely and accurate wages, maintain tax compliance, and significantly ease your back office burden. In conclusion Payroll is most effectively managed when it's simple, straightforward, and coordinated. When it starts getting tough to keep it that way, it's likely a sign that your company has grown and you're ready for more robust support. Outsourcing payroll to a construction accounting professional can save time, reduce errors, avoid costly mistakes, benefit from expertise, and reduce stress. This will allow you to focus on growing your business and achieving your goals.

PS

We offer free resources to help you save time and money that you can download and print now.

About The Author:

Sharie DeHart, QPA, co-founded Business Consulting And Accounting in Lynnwood, Washington. She is the leading expert in managing outsourced construction bookkeeping and accounting services companies and cash management accounting for small construction companies across the USA. She encourages Contractors and Construction Company Owners to stay current on their tax obligations and offers insights on managing the remaining cash flow to operate and grow their construction company sales and profits so they can put more money in the bank. Call 1-800-361-1770 or sharie@fasteasyaccounting.com

This Podcast Is Episode 560, And It's About Scaling And Adapting Business Strategies Amid The Cost Of Living Crisis When you're ready to take your construction business to the next level, you might start thinking about "scaling." No, it's not just a fancy term for growth; it's about doing more with less. Scaling is about increasing your revenue without proportionately increasing your resources—fancy yet practical, right? It's like sending an email: your effort is the same whether you send it to 100 people or 100,000. But, as of now, we also probably feel like we are in the thick of a cost-of-living crisis. This challenges entrepreneurs and is a nerve-wracking time for many small construction business owners. If you've had sleepless nights worrying about how you'll pay your suppliers or support your staff, you're not alone. You've likely already considered where to cut costs, but it seems impossible when suppliers raise prices.

But don't despair just yet! There are strategies to stretch your dollar further, and they're not always about trimming expenses.

What are the tricks to scaling and adapting effectively? Efficiently using your resources without emptying your pockets, the MAP way (Marketing-Accounting-Production).

So, how can you make this happen? Let's get into it.

1. Look at ways to bring or retain more money into your business.

Knowing exactly where and when money is coming from your business, is the first step to seeing where you can save costs. You could be paying for services you don’t even use or simply aren’t worthwhile. Take it one step further and ask yourself if the products or services you pay for add value to your construction business.

Arm up your marketing efforts

Spending more when you're looking to save might seem counterintuitive, but investing in marketing can yield profitable results in increased sales. There will be short-term costs, but effective marketing can substantially contribute to a positive cash flow in the long run.

Understand your clients

During uncertain times, empathy goes a long way. Understanding your customers' fears and concerns can inform strategies to drive sales. Depending on their situation, you might be able to offer more services or adjust prices without adverse reactions. As inflation rises and suppliers hike prices, it's crucial to respond accordingly or risk bearing the brunt of the impact.

2. Do what you can with the things under your control while monitoring external influences.

Resist the urge to slash expenses indiscriminately. Cutting back in the wrong areas might hinder the growth of your construction business. Make it a priority to retain your staff if you have any, exploring other places to trim costs or increase revenue instead. You can't control everything about your business, but you can stay aware of external factors that might impact buyers' behavior.

Keep it simple, keep it clean

Don't get lost in complexity. More complexities equal more chances for things to go wrong, time wasted, and resources spent. If you're scratching your head trying to understand a process or a tool, chances are, so are your employees and customers.

Keep it simple to keep control and keep everyone on the same page.

Monitor your competitors

Do you know how competing businesses cope with the cost of living crisis? Can you see what kind of strategy they've adopted? Understanding their strategies can provide insights about your place in the market and potential customer perceptions.

3. Embrace technology.

The daily processes and transactions involved in operating a general maintenance and repair contracting business can mean long hours of repetitive tasks and occasional oversights due to human nature. Automating these tasks can result in significant savings in resources and eliminate mistakes. However, the key is knowing which tasks should be automated and which ones warrant staff intervention and guidance.

Automation is your friend

The future is here, and it's all about automation. Some tools can take care of your administrative tasks, saving time and effort. From invoicing to project tracking, automation can streamline your process, making your construction business more efficient and leaving you with time and energy to spend in other areas.

Check the activities you perform regularly and explore whether there's a tool that could automate them.

Manage your receivables effectively

Nobody enjoys chasing after debts, yet doing so can significantly boost your business, especially in challenging times. Here are some ways to streamline the process:

• Adopt direct debit systems like for invoice collection.
• Enable invoice reminders via your accounting software.
• Consider asking clients for an upfront deposit or partial payment.

4. Use the situation to your advantage.

There's a silver lining in every cloud. Reduced sales? Use this time to review and streamline your business processes. Examine the reasons for changing sales patterns and adapt accordingly.

Rely on the data

Take out the guesswork and let data guide your decision-making. We're in the information age, and there's a metric for nearly everything. Know what's working and what's not by looking at how customers engage with your website or which marketing campaigns are most effective.

Making decisions based on solid data is more critical than ever. Use actual business data, not assumptions, to create your strategies. Don't create an approach based on what you think is happening, but on what is actually happening.

As the saying goes, "The numbers don't lie". Before making decisions, know your numbers!

Your data remains a reliable constant in an unstable economic and consumer landscape. Accurate, in-depth financial data is crucial to making informed business decisions.

Working closely with your accountant is a game-changer

A good construction accountant can provide the right solutions at the right time. Their expertise in your business can be instrumental in improving its financial health. They can help interpret the numbers, understand the situation, and guide your future steps.

Final thoughts

Scaling your construction business is all about smart growth. It's growing your revenue without increasing your expenses at the same rate.

Imagine increasing customer retention with minimal effort from your end. It's possible if you scale your offerings. Consider automatic renewals, subscription models - maintenance work if you're a plumber or repeatable pricing packages. Not only will these save you time from manual work, but they'll also boost customer loyalty.

The secret to effective scaling and adapting lies in maintaining simplicity, embracing automation, making data-driven decisions, and fine-tuning your offerings.

It's not just about working hard but about working smart. For further support navigating your construction business through the cost of living crisis and beyond, please contact us. We're here to help you.

PS

We offer free resources to help you save time and money that you can download and print now.

About The Author:

Sharie DeHart, QPA, co-founded Business Consulting And Accounting in Lynnwood, Washington. She is the leading expert in managing outsourced construction bookkeeping and accounting services companies and cash management accounting for small construction companies across the USA. She encourages Contractors and Construction Company Owners to stay current on their tax obligations and offers insights on managing the remaining cash flow to operate and grow their construction company sales and profits so they can put more money in the bank. Call 1-800-361-1770 or sharie@fasteasyaccounting.com

This Podcast Is Episode 559, And It's About Mastering Tone For Construction Company Connections

Mastering the right tone is critical when connecting and communicating with people in the construction business. Whether you're writing an email, making a phone call, or meeting in person, how you present yourself can make all the difference in building strong relationships with clients, colleagues, and partners.

Research suggests that as much as 93% of communication is non-verbal, so it's unsurprising that the tone and meaning of emails and messages are misinterpreted as much as half the time.

For small construction businesses, email is frequently the preferred way to communicate with new leads, customers, and employees – but if you haven't mastered your tone, the meaning of your message may be lost. In the worst-case scenario, you may even unintentionally offend your audience.

Follow these tips to improve your tone when writing emails or other business communications.

1. Adapt to your audience

Tone reflects the writer's attitude toward the reader, so you'll use a different tone depending on whether you're asking a bank officer for a loan or your client to respond to your change order question.

Your relationship and purpose will help you decide on your word choices, which might be serious and formal, or relaxed and fun. Using active voice will bring your reader right to the point. Taking care always to use courteous language will keep them on the side.

2. Be clear and concise

Avoid using jargon or technical terms such as' load-bearing walls' or' footings' that may not be familiar to everyone you're communicating with. Instead, try to use plain language that is easy to understand and gets your point across effectively.

If it's in written form and you doubt how an email may be interpreted, hit save and return to it a day later – or ask a colleague to read it and provide some feedback.

These additional tips can help you write emails that get read and avoid offense or confusion:

• Avoid using slang or sexist language
• Remove any unnecessary words
• Be appropriately respectful of subordination
• Be gracious (please and thank you. You go a long way with creating the right tone, which will keep you from being too abrupt, especially if your email is brief)

3. Be professional and respectful

Use proper grammar and spelling, address people appropriately in all your interactions, and avoid confrontational or aggressive language.

What to do when delivering a negative message:

The tone becomes a more significant challenge if your message contains terrible news. After all, there is no way around creating unpleasant feelings in some circumstances.

You can, however, avoid insult to injury by following these tips:

• Thank the reader for their message, briefly explaining why you cannot approve a request. In this case, passive voice is preferred because it helps neutralize the message.
• Take care to avoid personal attacks. You can maintain a professional tone by deferring to policies rather than personal feelings about an event or situation.
• Avoid the "bright side." Listing any perceived benefits can come off as uncaring by downplaying the emotional impact the reader may experience upon receiving the message.

Drafting a style guide this January for a fresh start will help make your construction company's "tone rules" clear to staff, help build greater brand recognition with a consistent voice, and help you avoid the wrong tone in your communications.

Start by defining your tone. Is it casual, fun, formal, serious, or quirky? Come up with five words that describe the tone of your brand. Then, list words that may and may not be used in your marketing emails.

To illustrate exactly what you're aiming for with tone, include some sample text in your guide – perhaps some of your company's collateral or examples of marketing emails you'd like your construction business to emulate.

Selling your services to homeowners involves art and creativity. Words are powerful, and visuals are captivating; combine them with your preferred business tone to make a fascinating webpage to attract the right audience.

You can also learn a lot by looking at your competition – pay attention to where they advertise, how they present their advertising, and the tone they use in their written material. Subscribing to competitor newsletters or regularly checking their websites is a good way of keeping up-to-date from a distance.

Remember, through it all, being an active listener is the key. One of the most valuable gifts one can give another person is to listen with empathy and understanding and let them speak until they are finished.

Final thoughts

Being personable and approachable in connecting with others is essential. Don't be afraid to inject a little bit of personality or humor into your messaging, as long as it's appropriate and doesn't detract from the overall professionalism of your communication.

Whether you're communicating with employees about company issues, hoping to negotiate a rent reduction with the landowner, or changes to credit terms to your banker, by mastering the tone in your construction business communication, you can build stronger relationships, avoid misunderstandings, and ultimately achieve tremendous success in your work.

PS We offer free resources to help you save time and money that you can download and print now.

About The Author:

Sharie DeHart, QPA, co-founded Business Consulting And Accounting in Lynnwood, Washington. She is the leading expert in managing outsourced construction bookkeeping and accounting services companies and cash management accounting for small construction companies across the USA. She encourages Contractors and Construction Company Owners to stay current on their tax obligations and offers insights on managing the remaining cash flow to operate and grow their construction company sales and profits so they can put more money in the bank. Call 1-800-361-1770 or sharie@fasteasyaccounting.com

This Podcast Is Episode 558, And It's About Practical Tax Season Tips For Construction Business Owners Tax season can be a bit overwhelming for construction business owners, especially with many things to keep track of in our industry. But don't worry; we're here to help! We know that construction businesses have unique tax considerations that can be tricky to navigate, such as complex accounting and bookkeeping challenges and issues related to payroll and sales taxes. That's why staying informed about the latest tax laws and regulations is essential, as well as working closely with a qualified construction accountant and tax professional who can guide you through this process and ensure you comply with all applicable tax rules and regulations. Preparing for tax season is a year-round endeavor. Tip number one for construction company owners is to update monthly financials using a streamlined software or cloud-based system. This way, come tax time, everything you need is in one place. Well-organized small businesses are better positioned to minimize tax bills while avoiding missing or inaccurate information penalties.

Here are four more ways to take the stress out of tax time and maximize your return.

• Know your credits and deductions.

Small businesses typically benefit from a wide range of tax credits. From special allowances for research and development to programs that supplement wages for student employees and apprentices, knowing which credits apply to your business can save you a tax bundle.

It's also essential for business owners to be savvy about deductions. After all, you want to keep as much of your hard-earned revenue as possible. Often-overlooked items you may be able to deduct include:

- Seminars, classes, or conventions you attended to improve your professional skills;

- Unused inventory that you've donated to charity (an excellent reason to consider donating your overstock rather than paying for storage) and

- Capital assets, such as office furniture, computers, and equipment.

Speak to your accountant about the deductions you can plan for each tax year.

• Be careful about what you claim.

If you run your business out of your home, you may be able to claim a portion of expenditures like utilities, insurance, property tax, and rent. But you must keep good records and receipts to justify why you've allocated business costs to your home office.

The same goes for home office computers and mobile phone expenses. Tax authorities will want to see how you've separated these assets from personal and professional use when you claim them as work expenses.

Want to claim drive time as a work expense? Ensure you submit a log of your business-related mileage to demonstrate how your personal vehicle was used professionally.

• Don't miss the deadline!

This should go without saying, but construction business owners are hit with severe penalties for filing taxes late yearly. Missing the deadline can have a range of negative repercussions, including:

- Added interest to amounts owing, plus a late payment penalty;

- Losing your claim to a refund;

- Loss of credits toward retirement or disability benefits and

- Delay of loan approvals (lenders require a copy of your filed tax return to process your application).

• Seek expert advice well in advance.

A survey of small business owners found that a full quarter don't understand their tax obligations. What's more, 27% only speak to their accountant at the last minute, just before the filing deadline.

Having trouble? You don't have to go through it on your own again. Set yourself up for success this year by following these four pillars of painless tax preparation:

1. Commit to clean bookkeeping from day one

Year-round, effective bookkeeping is the best way new business owners can minimize tax season stress. With the wide range of accounting software, there's no reason to rely on time-consuming manual methods that leave room for error.

All-in-one options like Xero and QuickBooks automate your most important bookkeeping processes, including:

• Tracking expenses;
• Tracking sales and income;
• Creating and sending invoices and
• Managing inventory.

With your financial records in one place and up-to-date, you're better positioned to maximize your refund while avoiding penalties associated with incorrect or incomplete tax returns.

2. Capture every business expense

Each year, 21% of small business owners claim less than half of their business expenses, primarily because they don't have a reliable system for documenting expenditures while on the go.

Without carefully logged receipts, entrepreneurs must forfeit valuable tax deductions, sacrificing cash they could funnel back into their business.

Cash in on claimable expenses using a mobile app to record receipt data, track mileage, and generate expense reports. As a bonus, many of these tools sync with your all-in-one accounting software.

3. Separate business from personal

Right from day one, small business owners should divide their personal and business expenses. Differentiating between the two will make it much easier to claim deductions on your tax return – and support those claims in case of an audit.

Recommended steps to separate your business and personal finances include:

• Create a separate bank account for your business, and designate a credit card solely for business purposes (this will help you track expenditures while building up your credit and borrowing power);
• Never combine business and personal expenses (for example, if you buy printer ink for your home and your business at the same time, ask for two separate receipts);
• Pay yourself a set salary from your business checking account each month (this will help you determine how your income and the company will be taxed).

4. Always consult with an accountant

Not sure exactly what you can claim as a business expense? Are you wondering which accounting software to use or how to interpret local tax regulations?

Consult with a construction accounting professional to put your mind at ease – well before the filing deadline! In addition to managing the nuts and bolts of tax preparation, regular meetings with an accountant will help you continuously improve construction bookkeeping practices and better understand the financial workings of your small business.

Final thoughts

Those organizational strategies you commit to now will promote positive relations with your local tax authorities – and the long-term financial health of your construction company.

Technology has made it easier than ever for small business owners to file for themselves, but when it comes to thoroughness and accuracy, nothing can replace the expert advice of an accountant.

Consult a business professional specializing in construction bookkeeping and accounting well in advance to ensure you get the most out of your tax return and that your documentation is complete. Conversely, accounting fees are often tax deductible, and I do not charge phone chats/consultations. Don't stress too much! Let me know how I can help you.

PS We offer free resources to help you save time and money that you can download and print now.

About The Author:

Sharie DeHart, QPA, co-founded Business Consulting And Accounting in Lynnwood, Washington. She is the leading expert in managing outsourced construction bookkeeping and accounting services companies and cash management accounting for small construction companies across the USA. She encourages Contractors and Construction Company Owners to stay current on their tax obligations and offers insights on managing the remaining cash flow to operate and grow their construction company sales and profits so they can put more money in the bank. Call 1-800-361-1770 or sharie@fasteasyaccounting.com

This Podcast Is Episode 557, And It's About Becoming A Better Project Manager By Improving Communication Skills In the construction industry, communication takes many forms, including written reports, drawings, emails, and face-to-face meetings. Each form of communication has its own set of advantages and disadvantages. For example, written reports and illustrations provide a permanent record of information, but they may not be as effective in conveying complex ideas as face-to-face interactions. Understanding how construction business owners and project managers, like you, if you do both (a one-person company), adapt to their environment, and facilitate procedures could make your company run smoother because there is no money in workplace chaos.

However, the thinking patterns and comfort zone of a well-trained staff or subcontractor are defined by the following:

• If it isn't broken, how can I ensure it stays that way?
• When it fails, I fix it, then I look for the root cause and work on that
• I maintain it so that it does not deteriorate into an emergency
• Everybody is my client; I work for the internal and the external client
• When I have to fix things, I must not have done my job right in the first place
• I gain recognition from knowing things are running smoothly and predictable
• My clients are important; the world revolves around them
• I don't know everything, so I ask lots of questions to uncover problems and opportunities
• I delegate responsibility to those who can handle it, and I guide them to success
• I read instructions because somebody else learned it the hard way and wrote about it
• Everything under my control is my responsibility; therefore, I empower myself to fix it
• Construction Project Managers loathe unpleasant surprises, so I seek to eliminate unpleasant surprises
• When a severe problem arises, I work with the team to develop a plan before it gets out of control
• Finally, I don't reinvent the wheel; I find who is doing things right and copy their success

Effective leaders are conditioned to avoid emergencies by being proactive and having systems to deal with emergencies. After the crisis has passed, they are ready to evaluate the emergency's root cause and implement change in the system to avoid a repeat performance.

That's why excellent communication is crucial in the construction business workplace. With so many moving parts and various stakeholders involved, clear and concise communication is necessary to ensure everyone is on the same page and working towards the same goal. Poor communication can lead to costly errors, delays, and safety hazards.

To become a better leader and improve communication in the construction business workplace, it is essential to establish clear lines of communication and ensure that everyone understands their roles and responsibilities.

Regular meetings and check-ins can help keep everyone informed and up-to-date on project progress and any changes or issues. It is also important to encourage open and honest communication, where team members feel comfortable sharing their concerns and ideas without fear of retribution. This can help to foster collaboration and creativity, leading to better outcomes for everyone involved.

One way to improve and encourage collaboration and clear communication in your workplace is by practicing simple ways to improve it:

1. Always maintain control of your emotions in stressful situations

Leaders are often called upon to make difficult decisions under circumstances that are not ideal. If you can keep a cool head and calmly make decisions in a crisis, the people around you will begin to recognize you as the go-to leader when new or challenging situations arise.

2. Remain focused on the conversation at hand

When you are in the middle of working on a project, it is easy to get tunnel vision that prevents you from focusing on what is happening around you. When someone engages you in conversation, always try to stay focused on what they are saying.

Occasionally, repeat your understanding of what the other person just told you. Not only will this behavior make them feel you value their input enough to listen, but it will also increase their respect for you as a leader/coworker.

3. Pay attention to your body language

It is important to remember that your body language can be just as essential as what you say. If you are in the middle of a conversation with someone and they see you furrowing your brows or not making eye contact, they could walk away with the impression that you are disinterested or angry with them. Try to maintain a neutral expression when conversing with your staff or coworkers.

4. Do not interrupt

People approach you when you are a leader because you have the answers. However, it can be easy to speak without a complete understanding of what is being asked and provide someone with incorrect information. Always allow the other person to finish their thought and ask their question in its entirety so you can give a thoughtful, helpful answer.

5. Do not make snap judgments when speaking to someone

Occasionally, leaders are sought out when someone has made a mistake or poor business decision. If someone you are leading comes to you and admits they have done something wrong, try your best to withhold judgment. Sometimes, this will require you to listen to their side of the story and reschedule a meeting later in the day or week to discuss a more productive course of action. Other times, it may be as simple as asking them for their solution and addressing it from that angle.

6. Be consistent with your feedback

Always consistently seek opportunities to offer cheerful and negative feedback when leading people. Many issues in building sites can be prevented by merely mentioning positive behavior when you see it and constructively pointing out negative behaviors as they occur in hopes of ending there.

Final thoughts

If you are looking for ways to lead more effectively, communicating better is one of the most accessible and valuable skills you can learn. Effective communication will help you gain the trust and respect of individuals around you, one of the most valuable assets you can acquire.

Overall, effective communication is essential for success in the construction business workplace. By establishing clear lines of communication, encouraging open and honest dialogue, and utilizing the right communication tools, construction teams can work together more efficiently and effectively to achieve their goals.

As we move forward, let's focus on improving our business practices, streamlining our processes, investing in our employees, and, more importantly, ourselves. We can succeed tremendously by providing our team with the necessary tools, training, and support to excel in their roles. Wishing you a prosperous and successful new year! PS We offer free resources to help you save time and money that you can download and print now.

About The Author:

Sharie DeHart, QPA, co-founded Business Consulting And Accounting in Lynnwood, Washington. She is the leading expert in managing outsourced construction bookkeeping and accounting services companies and cash management accounting for small construction companies across the USA. She encourages Contractors and Construction Company Owners to stay current on their tax obligations and offers insights on managing the remaining cash flow to operate and grow their construction company sales and profits so they can put more money in the bank. Call 1-800-361-1770 or sharie@fasteasyaccounting.com

This Podcast Is Episode 556, And It's About Rest And Reset For Construction Contractors And Business Owners To be in business and to remain in business, become a business person! To run a business, you must be business-like. It's not sufficient just to be very good at what you do. Many people who are 'very good at what they do' have failed. The familiar cry: "I'm far too busy for that" is no excuse. Are you 'too busy' to be a competent businessperson? If so, your construction business won't last long. You must continue to develop your business skills. To be a businessperson, you have to make an effort to become something of an 'all-rounder,' not just a specialist player. You can offer outstanding goods or services, but if you don't develop sound business systems, you are not a fully rounded businessperson, and your business will be in danger of failing.

Having a system in place is your key to enjoying a stress-free holiday.

There's no need to be overly anxious about your construction business during this period (this week, between Christmas and New Year, for instance) as long as you have a few basic precautions. It's never too late to start building a system; you never know when you might need a break for a momentous occasion or your health and well-being.

Back up all your important documents and information and store the backups in a secure place off-site. It also makes sense to take this one step further and check that you can restore your systems from your backup.

Arrange for a responsible staff member or someone independent of your business to monitor your premises (if you have one).

Alternatively, install security systems if you haven't already: fire alarms/sprinkler systems and break-in monitoring by a security firm. This is something to consider if you haven't done this yet.

It's also good to ensure you have appropriate insurance coverage and that your insurance policies haven't lapsed.

Practice the Art of Delegating - yes, this is possible even if you're a one-person company. You can outsource small tasks and hire a specialist for a more specialized job in many ways. A virtual assistant can communicate and respond to inquiries, emails, and social media. A construction bookkeeper can take care of your last bits of receipts and payroll.

You can also:

• Plan for contingencies. What would you do if staff fell ill? Who should be contacted if there are any unexpected calamities?
• Discuss your team's concerns and your own.
• Pick the right people for the right jobs. This is critical if you want your construction business to continue to operate well in your absence; you'll be relying on your staff while you are away. It is essential that you prepare them.
• Ensure everyone is familiar with the contingency plans – discuss, revise, and practice them before departure.

As a construction business owner, taking time away from work is essential. But worrying about whether staff are meeting deadlines and suppliers are happy translates to more stress and less time enjoying your holiday.

With some staff communication and planning beforehand, you needn't worry that your business won't be able to cope in your absence.

If you can't switch off from work mode or something urgent pops up, technology can be a great way to check in and ensure things are ticking along.

Is it time to start over?

For those of you who are using this week to rethink your administration and paperwork processes, I might be able to help you clear some bookkeeping blunders. Sometimes, a contractor's QuickBooks (or bookkeeping) file is a hopeless mess, and fixing it would cost more than simply starting over would cost. Here is a list of warning signs that can help you decide:

Nothing inside QuickBooks makes any sense to you.

None of the Financial or Job Costing Reports make sense to you.

Your QuickBooks bank or credit card balance differs entirely from your last Bank Statement.

Worse yet, your bookkeeper puts all the credit card statement charges in bulk using Journal Entries.

Time flies when everyone is busy. Start now and review your records for the following items:

• Missing Federal Tax IDs and requesting the W-9.
• Have all your employees verify their pay stubs for the correct address.
• Check Apartment numbers and zip codes. Have any of the neighborhoods been annexed into the city?

Year-End Accounting Clean Up

• Your Tax Accountant will send your booklet with what they want for records.
• What are the loose odds and ends missing for this year?
• Do you have a formal Accounting System?
• Do you need to clean up the Accounting beyond the last few months?
• Do you have bank statements?
• Can you find all your receipts?

Tax Accountants do "workarounds" to file your annual taxes. At some point, the Tax Accountant may refuse to clean up and deal with the Lack of Good Records or Messy Records. Tax accountants will have more clients who want their taxes done as the economy improves.

A good tax accountant can do Many Simple or Less Complicated Returns in the same amount of time it takes to do a Messy, Complex Business Return. More Tax Returns become more complex than is necessary because the documents or lack of records make them messy and complicated to deal with.

A tax accountant will assume you gave them everything you had. In reality, you gave The Tax Accountant only what You thought The Tax Accountant needed versus all of the records that might save you additional money in taxes.

A sound accounting system will help you decide better what to buy and what jobs to accept. When did you afford to take payment plans from your clients? When is the need or ability to raise your prices? Only you can decide if the lack of good records was worth the low price.

Final thoughts

If you're taking time over the holidays, really take time. Don't take time off but then spend that time constantly checking for work-related texts and emails or attending meetings. Put your cell phone away. Stop checking your email. Set an outgoing email that lets people know when you'll respond to their messages, and change your voicemail to note your days off. That way, you can rest, relax, and enjoy your break.

As the year ends, whether you are resting or restarting, don't wait until the last minute to get your accounting in order - start early to avoid any potential issues or penalties. Let me know if you need help with your year-end accounting. Contact us to find out how we can help you bring more balance to your business.

The New Year is three days away. Are you ready?

PS We offer free resources to help you save time and money that you can download and print now.

About The Author:

Sharie DeHart, QPA, co-founded Business Consulting And Accounting in Lynnwood, Washington. She is the leading expert in managing outsourced construction bookkeeping and accounting services companies and cash management accounting for small construction companies across the USA. She encourages Contractors and Construction Company Owners to stay current on their tax obligations and offers insights on managing the remaining cash flow to operate and grow their construction company sales and profits so they can put more money in the bank. Call 1-800-361-1770 or sharie@fasteasyaccounting.com

This Podcast Is Episode 555, And It's About The Benefits Of Outsourcing For Construction Company Owners Outsourcing can offer a range of advantages for small construction businesses in today's competitive market. Not only does it reduce costs and free up valuable time for owners to focus on growing their business, but it also provides access to skills and expertise that may be unavailable in-house. Small construction businesses can streamline operations, increase productivity, and scale faster than ever by working with external professionals or firms who work in certain areas. Because a small business focuses on survival, you pay much attention to the bottom line. This makes much sense, but it also leads to being seriously overworked. Contractors are under increased pressure to cut their prices to get enough work. And that means they need to reduce costs. New technologies and approaches in cloud computing for construction accounting give forward-thinking contractors a fantastic ability to get more for less -but in most cases, contractors' heads are still stuck in 1990, thinking they have to do everything themselves.

Here are some benefits of outsourcing for small businesses and how they can help your business succeed.

The advantages of outsourcing for small construction businesses

As a small business owner, you want to ensure that every aspect of your company is running smoothly. Outsourcing can benefit your business, including cost savings, access to special skills, and increased efficiency. By outsourcing specific tasks, you can free up time and resources to focus on core business functions. Outsourcing can also help you keep up with the latest industry trends and technologies, giving you a competitive edge in your market.

So, if you want to grow your small business, consider whether this is a viable option to help you succeed.

1. Identify which services and tasks are suitable for outsourcing.

When outsourcing, you must carefully consider which services and tasks are suitable for delegating to third-party providers. Factors such as the nature of the work, the level of expertise required, and the cost-benefit analysis must all be considered. For example, routine administrative tasks like data entry or customer service may be easy to outsource. Still, more complex tasks like software development or legal assistance may require a more strategic approach. Ultimately, outsourcing can offer numerous benefits to construction companies, including cost savings, improved efficiency, and greater flexibility. Still, it's essential to identify the right areas to outsource to magnify these benefits.

2. Review the cost-benefit of using a freelancer or third-party service provider.

When outsourcing specific tasks, businesses have two options: hiring a freelancer or contracting a third-party service provider. Each option has pros and cons that business owners should consider before deciding. On the one hand, hiring a freelancer can potentially save money since they typically charge less per hour than a full-service agency. However, freelancers may not have the same experience or resources as a third-party provider, which could lead to lower-quality work or additional costs down the line. On the other hand, contracting a third-party provider may be more expensive upfront, but they often have a team of experts with years of experience and access to top-of-the-line technology. Ultimately, the cost-benefit analysis will depend on each business's needs and the outsourced tasks.

3. Discuss different payment options when hiring a freelancer.

When hiring a freelancer, one of the critical things you must consider is how you will pay them and what payment options are available. Fortunately, several payment options can help you pay your freelancer easily and securely. These options include paying through platforms like PayPal or Stripe, using wire transfers, paying with credit or debit cards, or even choosing to pay by cryptocurrency. Each payment option has advantages and disadvantages, so choosing the one that suits your needs and budget is essential. Whether hiring a freelancer for a one-time project (like your company website) or on a long-term basis, choose a payment option that provides a safe and hassle-free experience for you and your freelancer.

4. Evaluate potential contractors' quality by researching their past work.

When finding the right contractor for your projects, researching their past work is crucial in evaluating their quality. You can review their portfolio of completed projects and read reviews from previous clients to gauge their satisfaction with the contractor's work. It's also important to check if the contractor is appropriately licensed and insured and to ask for references from previous projects. By taking the time to research potential contractors thoroughly, you can ensure that you're working with a reliable and qualified professional who will deliver high-quality work on time and within budget.

5. Learn how to manage an outsourced team effectively for maximum results.

As companies expand and seek cost-effective solutions, outsourcing has become a widely accepted practice in the business world. However, managing a team that is not located in the same office or even in the same country presents some unique challenges. Developing effective communication, delegation, and collaboration strategies is crucial to get the best results from an outsourced team. By establishing clear goals, providing regular feedback, and fostering a culture of transparency and accountability, you can ensure that your outsourced team is fully engaged and aligned with your business objectives. With the right approach, managing an outsourced team can increase your company's productivity, innovation, and growth.

Outsource Your Construction Bookkeeping

Anything not related to your core construction business is an outsourcing candidate.

When I say, "outsource your contractor's bookkeeping," I do not mean turn it all over to us or any other contractor's bookkeeping service because this never seems to work well. No, I'm talking about outsourcing specific bookkeeping services related to data entry, bills, payroll processing, and preparing Quarterly Tax Returns.

It is crucial that you keep control of your money. Outsourcing a contractor's bookkeeping is one of the ways to avoid bookkeeper embezzlement. Never let an outsider pay the bills, print checks, and authorize payment for payroll or any tax payments.

I suggest looking at every part of your internal contractor bookkeeping service and asking yourself a simple question: is this a unique and critical part of our construction company, and is it something only we do? If so, it stays in-house and needs the brightest minds you have working on it. If not, it is a candidate for outsourcing, and you need to look at it more closely.

Outsourcing a competent construction bookkeeper is a sound business decision as it gives you access to expertise and guidance you might not otherwise have, and it frees up your time and money to take advantage of other business opportunities.

In conclusion

Outsourcing can be a cost-effective and efficient way for construction business owners to manage their administrative tasks and focus on growing their business.

It is essential to carefully consider each potential service provider's advantages and disadvantages to ensure they meet your needs. Additionally, use references and research contractors' past experiences to guarantee that you get the best possible fit.

Finally, take the time to manage your outsourced team correctly so that everyone reaches maximum effectiveness in their jobs. Now might be the perfect time to evaluate whether outsourcing suits your business needs.

Everyone celebrates the Holiday Season in his or her way. Enjoy, Embrace, Be Glad, Be Joyful, and maybe a Little Sad. No one is up and happy 100% of the time. Do something nice for others. A smile is easy; it’s always with you and FREE. It can be a simple thing. Treating everyone a little nicer will make the day's challenges more manageable. I invite you all to join me in the Celebration of the Holiday Season of Living Well and being Happy.

Merry Christmas to one and all!

PS We offer free resources to help you save time and money that you can download and print now.

About The Author:

Sharie DeHart, QPA, co-founded Business Consulting And Accounting in Lynnwood, Washington. She is the leading expert in managing outsourced construction bookkeeping and accounting services companies and cash management accounting for small construction companies across the USA. She encourages Contractors and Construction Company Owners to stay current on their tax obligations and offers insights on managing the remaining cash flow to operate and grow their construction company sales and profits so they can put more money in the bank. Call 1-800-361-1770 or sharie@fasteasyaccounting.com

This Podcast Is Episode 554, And It's About Managing Work-Life Balance As A Construction Business Owner Wellness is an important aspect of life for everyone, especially construction contractors like you. Given the physically demanding nature of the work, contractors must prioritize their physical and mental health. Proper nutrition, exercise, and adequate rest are all necessary for maintaining a healthy body and mind. Additionally, taking breaks and managing stress can help prevent burnout and promote well-being. By prioritizing your health, contractors can feel better and perform better on the job. However, maintaining a healthy work-life balance can be difficult for a small construction business owner, as most know. You may work long hours, sacrificing personal time and family obligations to keep your business running smoothly. The duties and responsibilities of running your own business often take priority, no matter how personal pursuits are essential for your well-being. But, with the right strategies and mindset in place, it is possible to strike an effective balance between working hard on your business and making time for yourself. Set boundaries As much as we might love our jobs, we must remember that our mental and physical health always comes first. One of the best ways to ensure we care for ourselves is by setting boundaries for our work schedule. For example, taking regular breaks throughout the day can help us avoid burnout and increase productivity when we return to our tasks. Or, if we know that specific tasks require more energy and focus, we can set aside clear days to tackle them. Create a schedule that allows you to dedicate specific hours to work and specific hours to personal time. Avoid checking emails or answering work-related calls during your personal time, and encourage your employees to do the same. By sticking to a schedule that puts our well-being first, we can remain motivated and engaged in our work for the long haul. Do what works for you Ever feel like you have a million things to do and not enough time in the day to get them done? Trying to keep track of everything can be overwhelming without some system in place. That's why it's important to identify what works best for you and create a plan that keeps you on track and productive. Maybe you're a fan of to-do lists, or maybe you prefer to use a digital calendar. Perhaps you find that breaking tasks down into smaller, manageable steps helps you stay focused. Whatever it is, take the time to figure it out and stick with it. Your future self will thank you for it! Sort out what is important and what is urgent We often juggle multiple tasks and try to complete them all at once. This approach can often lead to suboptimal results or burnout. A better system is to sort our tasks based on their importance and urgency, focusing on the most important or urgent tasks first. This way, we can ensure that we are progressing in the right direction and achieving our goals. Identifying the most critical and urgent tasks may require time and effort, but it will pay off in the long run with increased productivity and reduced stress levels. So, next time you feel overwhelmed with a list of tasks, take a step back. Learn to delegate As much as we all might like to think of ourselves as superheroes who can handle anything and everything, the truth is that we're all human. Sometimes, even the most capable among us need a little assistance, and that's nothing to be ashamed of. Knowing when to delegate tasks can be one of the most important skills you can develop as a leader or even a responsible adult. Knowing when to ask for help – whether from family members, friends, or co-workers – can save you time, reduce stress, and improve the quality of the result. So, if you feel overwhelmed by a project or task, don't hesitate to ask for help. It might just make all the difference in the world. This will help you manage your time more effectively and allow you to enjoy your personal life. Rest It's easy to forget the importance of rest and self-care. But the truth is that getting enough sleep and practicing activities like yoga or meditation can be crucial to our overall health and well-being. A good night's sleep can help boost our mood and energy levels, and it's also been linked to a reduced risk of developing chronic health conditions. Similarly, self-care activities like yoga or meditation can help us feel more relaxed, reducing stress and anxiety. So, if you've been neglecting your sleep or self-care routine, now is the perfect time to prioritize them. Your body (and mind) will thank you for it! Make time for family and friends Yes, I have to mention this! It's easy to get caught up in work and forget to set aside time for the people we care about. Not only does it help us avoid burnout, but it also strengthens our relationships with those we love. Whether it's a weekly family dinner or a monthly game night with friends, committing to these moments of connection can profoundly impact our mental health and overall well-being. So, next time you feel overwhelmed by work or life, remember the people who matter most. They'll be there to lift you when you need it most. Final thoughts Take the steps necessary to establish successful systems for yourself and reap the benefits! Whether that means setting boundaries, delegating tasks, or even taking time off to spend with family and friends, design a process that works best for you. This works to your advantage, especially during the holiday or when loved ones need you the most. Achieving a work-life balance as a business owner in the construction industry is an ongoing process. Continuously evaluate your schedule and priorities to ensure you're making time for work and personal activities. It's important to remember that balancing work and life should be a priority – so don't forget to take care of yourself as you continue to strive for success! You deserve it.

PS

We offer free resources to help you save time and money that you can download and print now.

About The Author:

Sharie DeHart, QPA, co-founded Business Consulting And Accounting in Lynnwood, Washington. She is the leading expert in managing outsourced construction bookkeeping and accounting services companies and cash management accounting for small construction companies across the USA. She encourages Contractors and Construction Company Owners to stay current on their tax obligations and offers insights on managing the remaining cash flow to operate and grow their construction company sales and profits so they can put more money in the bank. Call 1-800-361-1770 or sharie@fasteasyaccounting.com

This Podcast Is Episode 553, And It's About How To Avoid Year-End Construction Bookkeeping Chaos As the year comes to a close, it's important to start thinking about your bookkeeping tasks to ensure a smooth transition into the new year. Deadlines are fast approaching, but it doesn't have to be stressful. Have you given your bookkeeper, wife, partner, accountant, or tax accountant the information needed to complete your reports? Accountants need good information to create detailed reports and save money on your taxes. Here is where the expression "Garbage In Equals Garbage Out" comes into play. It is impossible to create Job Costing Reports when all anyone knows is the deposit amount on the bank statement.

It's the Mad Dash To The End Of The Year as a contractor recently described their Year End Madness to prepare his documents for the Tax Accountant.

Are you in this cycle? I have great news for you - it is preventable.

1. Review your accounts:

Make sure all your accounts are reconciled and up-to-date. This includes bank accounts, credit cards, and any other accounts.

In Construction Accounting, not everything is an expense. Not every item, tool, material, or customer enters the Chart of Accounts. In some cases, Class Tracking is helpful, but most of the time, it is used to make up for a poor Chart of Accounts or as a "workaround" for an accounting product not designed to have Job Costing Reports or Cost Of Goods Sold.

Giving your bookkeeper only your bank statements and saying "Fix It" – I Want Job Costing Reports, I Want To Know Details is not enough. Doing it the way you have always done it – expecting a different result isn't how it works.

2. Review your files:

Go through your year's costs and ensure they are all properly categorized. This will help you with your tax reporting and better understand where your money is going.

One of the most overwhelming parts of the end of the financial year is finding all the invoices, receipts, and reports you need to file your taxes correctly. Pay attention to how easy it was—or wasn't—to find what you needed this past year.

Did you have to search 15 different places for all your receipts? Did you have a combination of online and physical invoices? Did you have clearly labeled folders for everything? Did you leave everything for the last minute?

If you search high and low for every piece of paper you need, you might want to consider revising your paperwork so it's easier and less time-consuming to manage.

Can you keep track of everything through software and apps? Is there technology or equipment that can help you? Is it worth investing in a filing cabinet?

The effort you put now into sorting your paperwork will pay off hugely every year when you can quickly and easily find all the information you need. Let's face it; you'll come up against the end of the financial year every year, so you may as well be systematic about it.

3. Collect your receipts:

Ensure you have all your receipts from the year. This includes receipts for business expenses, charitable donations, and any other tax-deductible expenses. Every missed receipt that is a business expense is a missed deduction. Bookkeeping is all about tracking the money. Money In, Money Out is just following the checkbooks.

Accounting is entering into an Accounting System that creates a Profit and Loss and Balance Sheet for the Tax Accountant to do the Annual Taxes. (Every successful contractor should have a Tax Accountant do their annual tax return)

4. Reflect on your year:

The end of the financial year is a perfect time to reflect on how the past year went. Celebrate the big successes, but remember to focus on other victories. Even if you didn't meet your financial targets, did you survive a particularly tough year? Did you manage to pivot your construction business and try a new model? Did you take some risks and learn from them? Did you grow your business or expand your offerings?

It's great to have goals for each year and celebrate when you achieve them, but it's also essential to look at where things didn't go according to plan and how you grew from those situations. You may need to refine your business plan if you're not meeting your financial targets or rethink how you arrive at your goals in the first place.

Do this before you start planning the year so you can revise your strategies in the future.

5. Plan for the new year:

Take some time to plan for the new year. This includes setting goals, creating a budget, and thinking about any changes you may need to make to your bookkeeping processes.

Now that you've reflected on what went well and what went sideways, you can better plan for next year. Research upcoming events and schedule your marketing calendar. Plan to address slow times or busy periods. If you didn't meet your financial targets last year, either change how you set your goals or your strategies for achieving them.

At Fast Easy Accounting, we have an entire department, The Project Management Department, that questions every bit of our Contractors Bookkeeping System every day and continually finds new and better ways to improve it and make it more valuable to Contractors like you no matter where you are in the USA Including Alaska and Hawaii.

For clients, we added a document management system that links with many banks and credit card companies across the country (adding more all the time). We still use our original Document Management System behind the scenes. The two companies have figured out how to work together to benefit us and our clients. Change is not always easy, but we are so glad we did.

The same applies to you, the construction business owner. As you figure out ways to be more efficient, better pricing, and prove a better product and service, your cash flow and profits will increase massively, which means more money in the bank to operate and grow your Construction Company and more freedom to do the things you want to do with your life!

Final thoughts

By following these tips, you can ensure that your end-of-the-year bookkeeping is completed accurately and efficiently, giving you a head start for the new year.

We are also here to help. We are not here to beat up on you for "How You Have Done It." You know it's messy and missing stuff. We know it, too, and we want to help figure out the gaps.

PS

We offer free resources to help you save time and money that you can download and print now.

About The Author:

Sharie DeHart, QPA, co-founded Business Consulting And Accounting in Lynnwood, Washington. She is the leading expert in managing outsourced construction bookkeeping and accounting services companies and cash management accounting for small construction companies across the USA. She encourages Contractors and Construction Company Owners to stay current on their tax obligations and offers insights on managing the remaining cash flow to operate and grow their construction company sales and profits so they can put more money in the bank. Call 1-800-361-1770 or sharie@fasteasyaccounting.com

This Podcast Is Episode 552, And It's About Why Online Reviews Matter And Ways To Deal With Negative Feedback In today's digital age, online reviews hold immense power and influence over the success of small construction companies. With easy access to social media, Google reviews, and review websites, customers can easily voice their opinions and experiences with your business online. Most people searching for a local construction company - whether they need a plumber, painter, or general contractor, will check their online reviews before deciding. Positive reviews can help establish credibility, build trust, and attract new customers. Conversely, negative reviews can damage a company's reputation and deter potential customers. Given the importance of online reviews, small construction companies should aim to provide excellent service and encourage satisfied customers to leave positive reviews. As a small business owner, you must understand the importance of online reviews, as they will impact your brand image, sales, and customer loyalty.

Boost your brand image

Online reviews are the first point of contact between your business and potential customers. Positive reviews can improve your brand image and credibility. When customers leave positive reviews, they help build an excellent impression of your brand, which can lead to increased sales and customer loyalty. A study conducted by BrightLocal found that 85% of consumers trust online reviews as much as personal recommendations. So, having a positive online reputation can make a big difference in the success of your small construction business.

Improve your sales

Online reviews can directly impact your sales. Positive reviews can help you attract new customers, while negative reviews can drive potential customers away. Positive reviews indicate that your business is reliable, trustworthy, and provides excellent customer service. You should encourage customers to leave positive reviews and respond professionally and promptly to negative ones.

Gain insight into customer experience

Online reviews can provide valuable insights into customer experience, which can help you improve your business. Reviewing them lets you identify areas to improve customer service, products, and business operations. Also, reviews can help you understand your target audience and what they value most about your business. Addressing customer feedback shows that you are willing to take the necessary steps to improve your business, which can enhance your online reputation and attract new customers.

Increase customer loyalty

Customers appreciate businesses that value their feedback. Responding to customer reviews and addressing their concerns shows you care about their experience with your business. When customers feel heard and appreciated, they are more likely to return and become loyal customers.

Ways to deal with negative online feedback/review:

Leave the negative review up

A negative review doesn't have to be the end of the world. Although customers like to see five-star reviews, they understand that perfection is almost impossible—and probably a sign that something is "too good to be true." In that sense, having a customer or two provide negative feedback gives more credibility to the positive reviews. Customers expect to see a couple of negative reviews. If they're in amongst positive feedback, the negatives won't hurt you much and may increase your legitimacy if handled well.

Respond to the review honestly

Customer complaints are a way to build trust with your potential clients by allowing you to respond honestly and professionally. Did something go wrong that was out of your hands? Offer an apology and explain what happened. Was there a misunderstanding? Take the opportunity to clear it up. Has the reviewer requested additional information or a solution? Respond online to show what you've done to address the situation. Did the reviewer misunderstand a policy? Explain your policy and invite them to contact you with further questions.

Doing so shows readers that you take their concerns seriously and are willing to take responsibility when things go wrong.

Learn from negative reviews

If you see the same concerns repeatedly in the online feedback, it may be time to review your services. Negative reviews give you insight into areas where your customers feel your business could make changes, so take the time to consider what you're being told. You can improve your offerings or communicate better with clients to manage their expectations.

Thank them for their feedback, let them know you're taking their concerns seriously, and explain your next steps.

In summary

A solid online presence with positive reviews can give you an edge over competitors. It shows that you're reliable, trustworthy, and provide quality work. Encourage satisfied customers to leave reviews on platforms like Google, Yelp, and Facebook. This can help increase the number of reviews and boost your overall rating.

However, remember never to pay for or incentivize customers to leave positive reviews. Make it part of your process to encourage customers to leave reviews by simply asking for them. Monitor and ensure you respond to any negative reviews professionally and promptly.

If possible, ensure your responses include an apology, a statement about your commitment to your clients, and a way to continue the conversation offline if further communication is needed. Doing so will show potential customers and clients that you care about their feedback and are willing to take responsibility. It will also allow you to move the conversation to a more private forum if the reviewer isn't happy with your response.

PS

We offer free resources to help you save time and money that you can download and print now.

About The Author:

Sharie DeHart, QPA, co-founded Business Consulting And Accounting in Lynnwood, Washington. She is the leading expert in managing outsourced construction bookkeeping and accounting services companies and cash management accounting for small construction companies across the USA. She encourages Contractors and Construction Company Owners to stay current on their tax obligations and offers insights on managing the remaining cash flow to operate and grow their construction company sales and profits so they can put more money in the bank. Call 1-800-361-1770 or sharie@fasteasyaccounting.com

This Podcast Is Episode 551, And It's About Recognizing The Value Of Construction Contractors In Our Daily Lives

I was taking a moment to reflect on the challenges for the Pilgrims coming to America. They decided to make the journey with no guarantee of success. To build homes, plant crops, and take care of animals. Then, later, everyone chose to move West by wagon train, horse, or on foot. I am grateful for them! I think about my Grandparents and my Great Grandparents. What was life like when they were children? Where did they come from, and how did they get to where they were?

The family's oral history seems so inadequate. My father shared so much, but now it looks like so little. Be glad for the simple things we take for granted:

• Going to the grocery store, deli, or restaurant for dinner
• Living indoors with electricity and indoor plumbing
• Driving a car
• Crossing the water on a bridge or ferry

Modern times. I am all for living in the city with the gas station and grocery store just down the street. I appreciate reliable electricity, and tree contractors trim powerlines year-round to help prevent outages. I am grateful for the linemen who repair power lines during a storm so we have electricity.

Please note: The offer does not apply to Outsourced Accounting, Bookkeeping Review, or any Consultation and Training products; you can, however, use it to purchase any course or monthly subscription classes in Construction Accounting Academy

Thank You, Contractors, for going to work so the rest of us can stay home safe.

Thank you to the road crews, police, firemen, linemen, tree crews, plumbers, and electricians who work when the news says "Stay Home" and to all the other contractors and emergency services I have not mentioned.

Contractors Make Our Lives Better

Contractors build and maintain the things that make our lives better. They built the factories where the factory workers work. The rancher and farmer, whom you don't think about as contractors, construct and repair buildings and fences and maintain equipment. They learn to be jacks of all trades, raise crops and animals, and battle the elements. Heat, wind, rain, snow, forest fires, or grass fires – they see it first—the more remote their location, the more diverse their skills.

Why did you decide to become a Construction Contractor?

Fast money, easy work, few hours, or all those reasons? Yes, contractors can make much money in this industry. Fast, however, is a relative term.

Definition of Fast Money

Collecting a job deposit is designed to lock down the job and buy materials. While using your client's money to start the project is always a good idea, that doesn't mean you have money to party heartily, buy a bunch of tools, or buy that brand-new truck you want.

The money will fly out of the checkbooks with everyday business expenses without extra help.

If you spend your job deposits in this manner, you get into a cycle of "Borrow from Peter to pay Paul." (author unknown) This was a favorite phrase of the '60s and '70s. What do I mean? Using the deposit from the next job to pay for expenses from the last job is a slippery slope to financial disaster. Another common phrase is "Leverage Is Great Until The Stick Breaks."

It's like a child's game of musical chairs. When the music stops, someone is without a chair. The same thing happens when the economy turns, as in 2008. Contractors thought (and hoped) the recession would be a slight dip and everything would return to normal by the summer of 2009. That is not what happened for most construction contractors.

Some construction contractors had lots of work in the pipeline unaffected by the recession.

Many were overconfident and thought other contractors had a hard time because they "just didn't know how to run a business." Unfortunately, those same contractors were badly hurt when their pipeline of jobs ran out.

Definition of Easy Work

Easy work is any job that you know how to do quickly. Preparing Thanksgiving dinner for twenty or more is a simple task for a chef. However, it might be impossible for a college student living in a dorm or shared apartment.

Definition of a Few Hours

Yes, construction contractors can work a few hours every day. Usually, they work twelve hours or more every day of the week. It is only a few hours to:

• Take the call
• Schedule the appointment
• Meet the client
• Create the bid
• Present the bid
• Collect the deposit
• Schedule the work
• Make a material list
• Pick up the materials
• Coordinate any employees
• Go to the homeowner's house or job site

As you begin the job:

• Think, plan, and do the work.
• Watch out for children and pets.
• Answer the homeowner's questions.
• Be polite and make small talk as needed.

Keep working at a pace that compensates for any time spent watching out for children and pets or chatting with the homeowner. The homeowner expects work to be completed on time or ahead of schedule, no matter how many interruptions you or your employees have.

End of the day – Clean up the job site so it is ready for use this evening or clean and ready for work tomorrow. Pick up all your tools and materials (mobilize and demobilize)

Meet with the homeowner to discuss the rest of the project.

Assure them all is going well. Make notes of possible change orders or add-ons. Do not forget to price out change orders. Homeowners remember that unless you agree to a price reduction in writing, you are not obligated to reduce the price.

The increase in scope is never forgotten. You Promised To Do [fill in the blank]. If you think any changes are omitted, wait; you will hear a grownup impersonating a preschooler wanting a cookie. Water on the stone is an understatement.

Like most Construction Contractors, you feel like you are waving the money as it goes by. Rest assured, it is true in Washington State, where contractors collect and pay sales taxes. The tax money is just moving through the checking account. Borrowing State and Federal tax money is very bad.

The same applies to payroll taxes, except the company must make a company match for Social Security and Medicare, pay state unemployment insurance and state worker’s compensation, and obtain a contractor’s license, contractor’s liability insurance, bond, and other specialty licenses.

The business of being in business as a construction contractor involves:

• Keeping track of a lot of paperwork
• Filling out and filing government forms
• Paying taxes

Financials are essential for filing annual federal taxes, whether you are a sole proprietor, LLC, or S-corp. The individual reports are for the benefit of the construction contractor.

• Are you making money?
• Which job? – Did you like that particular type of job?
• Do you go into any job knowing it will barely break even?
• Are you passing out business cards or flyers to the neighbors of your current or past jobs?
• Are you driving long distances between jobs?

Final thoughts

You couldn’t change yesterday; you could only review it and think about what you could do today. And how can you have a better tomorrow? Tiny changes can make a big difference. Sometimes, taking a pause is the right decision to make.

Money makes the world go round. It is hard to buy gas or groceries with hope and a promise. It is not unreasonable to expect to be paid for your work. Contractors like you bring value to everyone's life you touched. I am rooting for your success and wish you and yours the best in everything that comes your way.

PS

We offer free resources to help you save time and money that you can download and print now.

About The Author:

Sharie DeHart, QPA, co-founded Business Consulting And Accounting in Lynnwood, Washington. She is the leading expert in managing outsourced construction bookkeeping and accounting services companies and cash management accounting for small construction companies across the USA. She encourages Contractors and Construction Company Owners to stay current on their tax obligations and offers insights on managing the remaining cash flow to operate and grow their construction company sales and profits so they can put more money in the bank. Call 1-800-361-1770 or sharie@fasteasyaccounting.com

This Podcast Is Episode 550, And It's About Becoming A Better Construction Leader By Practicing Generosity If you have been lucky enough to encounter generous people, you understand they have a unique gift for garnering the respect and admiration of individuals around them. When you are a leader, having a positive relationship with the people who follow you is a huge asset you cannot put a price on. In the construction business, generosity and helpfulness are two fundamental traits that can make a business successful. When contractors are willing to share their knowledge and expertise with others, it creates a sense of community and fosters growth and success for everyone involved. Additionally, when contractors are generous with their time, resources, and even their finances, it can significantly impact the success of other businesses and individuals. t is the right thing to do and being generous because it is something you value are two different things. If you want your generosity to be compelling, it must come from a place of sincere care and concern for those you lead. Being generous to others not only lowers their anxiety and increases their appreciation for you, but it also adds to your happiness and health. 2. Look for moments to be grateful. Being grateful could be as simple as sending a brief, personal thank-you email when the occasion arises. You do not need to create a large display or spend much money to make people feel valued. Simply watch for positive behavior in others, and when you see it, make a mental note to acknowledge it and express your gratitude. 3. Find opportunities to give back to your community. Depending on your resources and the capacity to lead others, the extent of your reach may vary, but don't let that stop you from finding ways to give back to your community. Most homeless shelters have standing requests for donations of socks, bottled water, coats, and blankets. Speak to your company to gauge their interest and help organize a supply drive or fundraiser to give back to your community. When the people you lead see you being generous, it displays your character and often increases their respect for you. 4. Become more hopeful. Naturally generous people are often idealists. They perceive how the world around them should be and believe in the goodness of people. Becoming an optimist could be a struggle if you are naturally pessimistic, but it is not insurmountable. Next time a challenge arises on the team you are leading, go above and beyond to believe the best in others and trust that the outcome will be positive even when it may not look that way on the surface. 5. Look for opportunities to trust others. Trusting others may not seem like a quality of a generous person; however, one of the most remarkable ways you can be generous with others is by trusting them enough to allow them to take the lead on things that matter to them. Trust their ideas and, more importantly, their ability to complete the task. When you loosen your grip as a leader and trust the people around you to do what needs to be done, they will see you as a more trustworthy, generous leader. There are many ways to express generosity toward others. When you look for opportunities to be more understanding and helpful, the people you lead will feel more secure following you. A leader needs to gain trust and respect; one of the best ways to do that is by being generous as often as possible! And what's the most generous thing you can do for yourself? Hire help! If you're like most construction business owners, there are never enough hours in the day to complete every task on your list. Often, you must prioritize what you need to do right now – deal with a client, estimate a project, attend an event – and what you know you should do for the ongoing growth of your business. It sounds simple, but many entrepreneurs' self-sufficient, independent nature can make it difficult to get comfortable delegating responsibility. Finding the right people to relieve the burden of doing everything all the time is the only way a business can scale and reach its potential. Think carefully about how you spend your days. Are you still at the point where you want to – or need to – do it all? The ultimate success of any company is to reach the point where it can run without you so you can enjoy a holiday, pass the business on to a family member, or sell it. Start outsourcing the tasks you like the least - it could be managing your online presence or bookkeeping, for instance, so you can spend more days with the things that matter and the people you love the most. Final thoughts Developing new business habits takes time and commitment – but the payoff is well worth it! Generosity can help you become a better construction business owner. It means going above and beyond what is expected of you and being kind and empathetic toward your employees, clients, the community, and yourself. When you approach your business with generosity, you create a culture where everyone feels valued and respected. This, in turn, can lead to increased productivity, better client relationships, and a positive reputation within the industry. So, if you're a contractor looking to positively impact your community and build strong relationships with others in the industry, consider being generous and helpful whenever possible. It may lead to tremendous success and satisfaction in the long run.

PS

We offer free resources to help you save time and money that you can download and print now.

About The Author:

Sharie DeHart, QPA, co-founded Business Consulting And Accounting in Lynnwood, Washington. She is the leading expert in managing outsourced construction bookkeeping and accounting services companies and cash management accounting for small construction companies across the USA. She encourages Contractors and Construction Company Owners to stay current on their tax obligations and offers insights on managing the remaining cash flow to operate and grow their construction company sales and profits so they can put more money in the bank. Call 1-800-361-1770 or sharie@fasteasyaccounting.com

This Podcast Is Episode 549, And It's About Construction Company Budget Vs. Cash Flow

Finding some certainty can make all the difference in the unpredictable construction business world. While the future remains a mystery, budgeting and cash flow forecasting tools can significantly reduce uncertainty, allowing you to anticipate challenges, learn from past events, and enhance your ability to navigate your business.

Budget vs. Cash Flow: The Crucial Distinction

A common misconception is that a budget and cash flow are interchangeable. A budget is a projection of future possibilities, enabling you to consider various sales and expense scenarios. On the other hand, a cash flow provides a record of actual expenses and sales revenue that flow into and out of your business each month. Although they often deal with the same data, their applications differ.

Budget and cash flow are both essential concepts in construction management. However, they serve different purposes and are used in different ways. A budget is a financial plan that outlines expected income and expenses for a specific period. In construction, budgets are typically created for individual projects or a company. The purpose of a budget is to help managers plan and control expenses, set goals, and allocate resources. On the other hand, cash flow is a measure of the amount of cash coming in and going out of a business over a specific time.

In construction, cash flow is significant because it can be used to determine whether a project is financially feasible and whether there is enough cash on hand to pay for expenses. Budgets and cash flow are related but not the same thing. A budget is a plan, while cash flow measures actual cash transactions. A project can be under budget but still experience negative cash flow if expenses exceed income.

Conversely, a project can be over budget but have positive cash flow if income exceeds expenses.

You might budget $1,000/month for online costs, whereas in the cash flow, you'd record the actual amount spent. Despite their distinct uses, cash flow and budgeting are often maintained on the same spreadsheet or similar accounting software for ease of use and comparison.

The advantages of budgeting and cash flow forecasting

Incorporating budgeting and cash flow forecasting in your construction business has numerous benefits. They help predict and manage potential cash surpluses or shortages, plan for tax obligations, time new equipment purchases, determine when to buy in bulk, and even identify when you might need a small business loan or a line of credit.

Budgeting and cash flow forecasting are essential tools for any construction business. They provide a clear picture of the company's financial health and help identify potential problems before they occur. By creating a budget, companies can plan their finances more effectively, set realistic goals, and allocate resources to maximize profitability.

This is particularly important in the construction industry, where projects can be complex and costly. Cash flow forecasting is equally essential, enabling businesses to understand their cash position and ensure they have sufficient funds to meet their obligations. This is particularly critical in construction, where delays or unexpected expenses can quickly impact cash flow. By forecasting cash flow, businesses can plan for these contingencies and ensure they have the necessary funds available when they are needed.

One handy feature is the ability to track expenses and highlight any unusual cost increases or decreases. This allows you to take prompt action to address the issue. Additionally, these tools can help monitor sales levels and flag any underperforming areas of your business.

Practical tips for effective budgeting

Preparing an annual budget requires sufficient time – allocate at least two or three months for this process. Update your budget each month based on the actual cash flow. Remember that the sales forecast is often the most challenging part. If you're new to the construction business, examine separate estimates for different products or geographical areas and note any seasonal patterns in your company and industry.

Sensitivity analysis: a proactive approach

A sensitivity analysis, often called 'what if' scenarios, can help you understand how different outcomes affect business performance. This analysis allows you to review the effects of changes in your revenue or costs.

The power of regular updates

Regularly comparing your actual expenditure against your budget enhances your ability to predict future costs accurately. Reviewing and updating your budget and cash flow forecasts at least once a month or more frequently if your business environment changes quickly is good practice.

Having a construction accountant on board can be incredibly beneficial when managing finances in the construction industry. One of the critical advantages of having a construction accountant is their ability to help with budgeting and cash flow. A construction accountant can assist with creating a budget that takes into account all of the costs associated with a construction project, from materials and labor to permits and fees. By having a detailed budget, contractors can better manage their cash flow and avoid surprises down the line. Additionally, a construction accountant can provide ongoing financial analysis and reporting, allowing contractors to stay on top of their finances and make informed decisions about future projects and investments. With the help of a skilled construction accountant, contractors can better manage their finances and set themselves up for long-term success.

In summary

Budget and cash flow are essential in construction management but serve different purposes. A budget helps managers plan and control expenses, while cash flow helps determine whether a project is financially feasible and whether there is enough cash to pay for expenses.

Budgeting and cash flow forecasting are potent tools to help construction businesses like you manage your finances more effectively, plan for the future, maximize profitability, and guide your business decisions. However, their value lies in their regular review and updating, ensuring their figures remain current and reflect your construction business's financial health.

PS We offer free resources to help you save time and money that you can download and print now.

About The Author:

Sharie DeHart, QPA, co-founded Business Consulting And Accounting in Lynnwood, Washington. She is the leading expert in managing outsourced construction bookkeeping and accounting services companies and cash management accounting for small construction companies across the USA. She encourages Contractors and Construction Company Owners to stay current on their tax obligations and offers insights on managing the remaining cash flow to operate and grow their construction company sales and profits so they can put more money in the bank. Call 1-800-361-1770 or sharie@fasteasyaccounting.com

This Podcast Is Episode 548, And It's About The True Value Of Networking To Contractors And The Community The ability to network is a fundamental part of running a business. Running a business in isolation is difficult, so it helps to have expert partners and acquaintances available to share ideas with. If you're looking to network with construction industry professionals, there are several ways to do so. 1. Attend industry events: Look for construction industry conferences, expos, and trade shows in your area. These events often have networking opportunities, such as meet-and-greets or after-hours social events. Conferences are a way to actually meet in person, so the results can be hard to beat. Most conferences have time set aside for networking, allowing you to meet everyone in your niche. More work might involve getting to a conference, but the networking opportunities alone are often worth it. Best results can often be gained by creating a good impression in person, followed by an online contact. 2. Join industry organizations: There are many professional organizations for people in the construction industry, such as the National Association of Home Builders, the Associated General Contractors of America, and the Construction Management Association of America. Joining one of these organizations can give you access to networking events and other resources and benefits. 3. Connect on social media: LinkedIn is an excellent platform for connecting with other professionals in your industry. You can also join LinkedIn groups related to construction and participate in discussions to connect with others. Podcasts are popular now, so you should consider creating one for your niche audience. Regarding networking, though, a podcast can introduce your personality to relevant experts. Getting an interview might be your priority, but you can get better results if they are tempted to contact you directly. Discussing important industry news and updates will be attractive to industry leaders who are passionate about their niche. An interview will give you direct contact with an expert, allowing you to make an impression and promote their brand. You might not get every consultation you desire, but most experts seek ways to promote themselves and will oblige. If you can approach them with a credible website, there is a good chance you can get some of their time. Social media is perfect for networking, mainly when people are open to communicating directly. If you find an active expert in your niche, respond to their questions or comments. By making good contributions, you will quickly be noticed. 4. Attend local business events: Many cities have local chambers of commerce or other business organizations that hold networking events. These can be a great way to meet other professionals in your area and make connections. 5. Volunteer or get involved in your community: Volunteering for a local charity or community organization can connect you with other professionals who share your values and interests. This can be a great way to make connections and build relationships. When you get a chance, volunteer at your kid's school (or a local school if you don't have children of your own). They may need to make props for a school play or a quick paint job. This will open doors for you to meet parents and teachers who might need home service repair or remodeling. Remember, networking is about building relationships, not just collecting business cards. Be genuine, be interested in others, and follow up with people after you meet them to continue the conversation. There are all kinds of groups dedicated to networking. Some are highly structured with performance requirements, exclusive membership, and the payment of dues. Others are free form, come as you please, and no charge. Not every group is suitable for every kind of business. You will find that some groups may not have connections in the market you are seeking to attract. You will find that some groups have rules that just don't fit with how your business works. Yet one factor is often overlooked when considering a networking group: does this group offer more long-term or short-term value? When focusing on short-term value, you see each group member only as a prospect. This limits the business potential of the group because you can't reach beyond the people in the room. If there are only 50 members, and 25 of them fit your prospect profile, what do you do once you have presented to all 25? You can either quit that group to start all over again with another group, or you can take a long-term value approach. The long-term value of networking groups lies in building strong trusting relationships that will give you influence beyond the people in your immediate group. Discover Needs If you are like most people, you are already pretty clear about what you need. You may not be clear on what your business connections need. Do you know anyone who is a good prospect for them? Can you recommend or offer services that will help them? Find out what your contacts need and act to fulfill those needs. Be generous Stop looking at every person in your networking group as a potential sale. Especially early on, be more concerned about what you can give than what you can get from these meetings. Give materially by sponsoring group events, donating to fundraising efforts, or bringing in some bagels for the meeting. Give your time and effort by contributing to a service position, or be free with great ideas and a welcoming smile. Especially give liberally by helping others make valuable connections. If you can help one of your group members by introducing yourself, do it. If you are generous, the effort will come back to you. Build trust People seek out people they can trust. Cultivating trust takes time and effort, but is worth it. When it comes to business, trust is based on three factors: Value – do you consistently bring value to the relationship? Dependability – are you the real deal? Can you be depended upon? Consistency – are you consistent over time? It is harder to develop trust if you are an occasional participant or just passing through. Hold regular one-on-one meetings with group members. Get to know them, and they will get to know you. Networking groups provide valuable business allies who can open doors and remove obstacles. Cultivate relationships instead of just asking for sales appointments. Because strong relationships build strong businesses over the long term, this is the most valuable approach to networking. By implementing these methods, networking will become far more accessible. One of the problems with networking is the effort it can take for no results, but these methods all involve adding value. When an expert can see that you are being helpful first, making a connection becomes smoother. All it requires is a few people with a reputation to support you, with this social proof adding to your status. PS We offer free resources to help you save time and money that you can download and print now.

About The Author:

Sharie DeHart, QPA, co-founded Business Consulting And Accounting in Lynnwood, Washington. She is the leading expert in managing outsourced construction bookkeeping and accounting services companies and cash management accounting for small construction companies across the USA. She encourages Contractors and Construction Company Owners to stay current on their tax obligations and offers insights on managing the remaining cash flow to operate and grow their construction company sales and profits so they can put more money in the bank. Call 1-800-361-1770 or sharie@fasteasyaccounting.com

This Podcast Is Episode 547, And It's About Essential Bookkeeping Practices For Construction Start-Ups Starting a new construction business is exciting but has its fair share of responsibilities. One of the most critical responsibilities is maintaining accurate records of your business transactions. From saving receipts to processing employee payroll, every money-related detail should be documented. It's not just about keeping things tidy; it's about understanding the financial health of your business and meeting all your tax obligations. Don't underestimate the basics Some small businesses continue to rely on traditional systems, like pen, paper, and a trusty shoebox. Although it may seem outdated, this method can work well for businesses with few transactions. These businesses might not have the latest payment technology and could be invoicing customers or receiving immediate cash or cheque payments. In such cases, they must maintain a record of all receipts, past, present, and future jobs, and a log of their customers and transactions. In fact, to this day, most of our local construction clients will drop by our office to hand over their receipts, invoices, and paperwork in shoeboxes, envelopes, or plastic containers. Of course, if you're serious about your business, you might want to consider using a more accurate system. The power of spreadsheets In the digital age, spreadsheets offer a simple and effective way for construction start-ups to keep track of their financial activities. A spreadsheet can be a cost-effective alternative when starting or operating a part-time business with a limited budget. As your business grows and becomes more complex, you can transition to specific accounting software. With a spreadsheet, you can set up a basic accounting system to track invoicing, perform calculations, and even set up a budget. Embrace accounting software For those more serious about their business, subscribing to accounting software might be the best option. Modern accounting software often links directly to your bank account, making it an efficient way to document all necessary transactions. It also reduces the risk of errors and offers features like generating professional invoices, tracking debts, and ensuring everything is entered accurately for your accountant during tax season. If you opt for a cloud-based solution, you'll enjoy real-time access to your accounts, increased data security, and the flexibility to access your financial data anytime, anywhere. When you become a client, accounting software and training are included in your subscription. The best part? You can access it 24/7, know how much it will cost, and you are not forced to sign an annual contract and pay a fine if you change your mind; if you're unhappy with our services, you can cancel it anytime. Stay on top of your cash flow Regardless of your accounting system, a good strategy will enable better decision-making based on real-time financial insights. Identifying cash flow trends can help drive your construction business growth by revealing your most profitable products and services, biggest clients, highest costs, and more. The ability to monitor these trends places you in a better position to improve your profits and spot potential growth areas. Financial management is vital to running a successful contracting business, but entrepreneurs often start their business with little understanding of making solid financial decisions. Managing your finances is more than bookkeeping and paying taxes, which are crucial to a sustainable business. It's about managing cash flow, preparing for income fluctuations, and having the resources to take advantage of opportunities. Here are six practical money management tips you should follow if you're a first-time entrepreneur or even if you are a seasoned restarting construction business owner to increase your chances of success. 1. Have a budget Having a budget is essential in being on top of your finances. Knowing how much money you have, how and where you spend it, your limits on how much you'll spend, and where the money comes from gives you crucial information about your profitability. That data can then help you make vital operational decisions about your construction company—such as where you need to save money and where you can spend more. Having a budget and accurate records helps keep your business and finances on track. Every important financial decision should be weighed against your budget. 2. Start an emergency fund Your emergency fund doesn't have to hold much money, but it is there for you in case of sudden emergencies. Even highly successful companies have periods where they struggle financially—often due to circumstances well beyond their control, such as market shifts. An emergency fund can help your business survive during times when income drops. It can also provide you with needed cash to take advantage of an unexpected opportunity. 3. Don't spend too much New construction business owners might feel tempted to grow their businesses too quickly, make significant but unnecessary purchases, or hire too many people before they have financial stability. Wait until you have a steady, reliable cash flow to make significant changes to your company. At least initially, it's important to focus on the necessities for running your business and get to know your business cycle. Don't spend large amounts of money until you know when your busy periods are and when the slower times tend to occur—and how drastically they affect your finances. Plan for massive expenditures and establish guidelines for when you'll start spending more money, for example, after a set period of stable income. Then, stick to the rules you've set out for yourself. 4. Hire an accountant An experienced accountant can help you understand tax laws and take advantage of deductions. Without an accountant, you could face an unwelcome and unexpected surprise when your taxes are due. You can also make costly mistakes if you do your taxes. Tax regulations can affect everything from your company's ownership structure to the best ways to spend your money so you can decrease your financial obligations at tax time. Hire a construction accountant and get to know them well so they can give you tax advice that meets your needs. 5. Keep your business and personal finances separate It can be enticing to mingle your business and personal finances, especially if your business is small. However, doing so means you don't have accurate financial information about your construction company or yourself. It's also vital to pay yourself an income from your business. This helps ensure you're financially stable. Combining your business and personal finances means you aren't paying yourself. You keep whatever is left over after everything else is paid for. This leads to situations where your business becomes unsustainable because all your money goes into the company, leaving you with nothing to live off. Open a business bank account and draw your salary from that. 6. Maintain a good credit score Good credit is essential for construction business owners. It establishes your creditworthiness and enables you to apply for loans, open accounts, and maintain a steady cash flow. You must know your credit score and maintain a good rating. If your credit score is poor, focus on paying bills on time and double-check to ensure your credit report is accurate and up-to-date. Wrapping up As a construction start-up, your primary task is to evaluate your construction business needs and choose an accounting system that allows you to track your cash position accurately, keep precise records for tax purposes, and identify cash trends. Consulting with your construction accountant can be an invaluable first step. They can advise on the best system and ensure it's compatible with their processes. Remember, your financial records are the lifeblood of your construction business, and keeping them in perfect order is integral to your success. Do you want to discuss what system will best suit your needs? I am here to help. Fill out the form on the right (or below, for mobile users), and I'll get back to you shortly.

About The Author:

Sharie DeHart, QPA, co-founded Business Consulting And Accounting (Fast Easy Accounting) in Lynnwood, Washington. She is the leading expert in managing outsourced construction bookkeeping and accounting services companies and cash management accounting for small construction companies across the USA. She encourages Contractors and Construction Company Owners to stay current on their tax obligations. She offers insights on managing the remaining cash flow to operate and grow their construction company sales and profits so they can put more money in the bank. Call 1-800-361-1770 or sharie@fasteasyaccounting.com

This Podcast Is Episode 546, And It's About Seven Sure-Fire Ways To Grow Your Construction Business

Once your construction business is up and running, it’s essential not to rest on your laurels. Successful business owners always look for ways to grow and maximize their profits. We’ve compiled a guide and checklist to help you identify ways to get the most out of your contracting company.

1. Grow your sales Contact your best clients. One of the easiest ways to increase sales is to sell more to your existing clients. For example, you could try contacting every customer and offering a complementary product or service they might need now. You could also determine when clients need maintenance checks. Create a client loyalty scheme. You’re looking to create a customer care program using customer contact software and implementing a customer loyalty scheme. Commence a contact nurturing program. Can you make more effective use of your database of customers and clients by maintaining regular contact through newsletters (physical or email), phone calls, personal visits, or attendance at conferences and trade fairs? Do you advise them of special offers or tell them about any products and services they have not previously bought? Develop a social media campaign. If you’re not on social media, now’s the time to start. It’s one of the most essential marketing tools and one of the cheapest (and often accessible). Run webinars/demonstrations. By doing this, you’re positioning yourself as an expert in your industry, creating brand awareness and customer trust. It’s also a great way to network among industry peers and meet potential customers. Attend and exhibit at trade shows. These are important for the same reasons you’d run webinars and demonstrations, but trade shows also offer the chance to get your product to new customers, increase word-of-mouth advertising, and add more to your customer database. Cross-sell complementary products/services. Learn the fine art of cross-selling, which suggests to customers that whatever they’re buying from you would be of more value if they purchased a complementary item. 2. Grow by developing new services Research new ideas and see if you can update current services. You’re looking to identify any new products or services that a) complement those already existing and b) your customers have indicated they’d be interested in buying them from you. Any new product needs to complement what you already sell, not be a substitute. Otherwise, there is no growth in sales. Check financial feasibility It’s essential to ensure there’s a demand and that you can create the product. Diversifying into new products is a medium to high-risk growth strategy because new products and services cost time and money to source or develop. Test with customers From friends and family to more formal focus groups, testing your product in your target market and recording and analyzing the results is essential. You’ll be able to determine if the demand exists and if there are changes you could make to the product or service before taking it to market. Protect intellectual property The last thing you want is your brilliant idea and all the work that went into creating it nixed at the last minute because someone else beat you to the patenting, copywriting, and trademarking. Equally, you don’t want to steal someone else’s idea, so protect your IP and ensure you’re not breaching anyone else’s. 3. Grow by improving profits Improve efficiencies Technology’s great here – there are many ways you can use it to make your processes more efficient. So review all your systems and look for ways they can be improved. The better the system, the more efficient and productive it will be. Look at your customer base. Do you have habitually late or non-paying customers? It might be time to ditch them. Increase prices Increasing prices widens your margins and raises the cash you might need for business growth. You should always seek to increase your prices over time to improve your profit margins and keep up with inflation. Make sure you communicate to your customers the reasons for the price increase. It’s essential to convince your target market that your products or services are worth the additional cost, so consider ways to justify a price increase and focus on the benefits. Streamline debt collection so there’s more cash coming in. Make sure you’re always paid on time. If your customers owe you money, the faster you can obtain it using effective collection tactics, the better. Ideally, you want to reduce the chance of bad debts and pressure on your business’s cash flow. 4. Grow your capability Assess your capacity to handle expected growth. This is especially important if you need additional equipment or space. Capacity building is about working on your business’s ability to do more internally – such as speeding up production or improving your systems and processes. Retrain current staff if your business’s growth requires new skills. Exploring the available training options is a good idea if your current staff would benefit from retraining instead of taking on a new employee with those skills. It’s crucial to discuss retraining with your team to ensure they can fit it into their schedules. Review your technology What you’re looking to do is determine if you need to upgrade internal systems or software. Ensure that your systems can administer your business and that its sales can handle expected growth. 5. Grow by updating your construction business model Develop a strategic alliance to gain shared advantages. Consider entering a strategic alliance with successful distributors or complementary businesses, as you may be able to expand your business’s reach and win new customers more cost-effectively. Purchase a competitor Not only will you expand your customer database, but you’ll also get access to their staff and suppliers. Odds are that your competitor has unique strengths your business can benefit from. You’ll be able to open up to new and diverse markets as you add more value for your customers. And, because you already know the industry, acquiring a competing business should be a safe investment if everything checks out once due diligence is complete. 6. Grow staff expertise Investigate training courses your staff can attend As your business grows, so should your staff expertise. You and your employees must be well-trained in how to use them. Aside from in-house training, look at educational institutes and the courses they offer to determine if any of them complement your business. Run in-house seminars on new technologies. If you’ve installed new software that your staff will need to use daily, ensure they’re up to speed by training them in-house. You might want to get a specialist on the new software to conduct the training, or if you’re an expert, you can do it yourself. This applies to any new technology you’re introducing to your business. 7. Grow your cash reserves Free up internal cash. You want to avoid seeking a loan or outside investment here. Reduce the number of withdrawals you’re making, or look at leasing equipment only when needed instead of buying it. If you can achieve growth without borrowing to do it, so much the better. Weigh up the risks versus rewards to assess whether you need a loan. It could be that there’s no other option than to borrow money to finance your business growth, but you should carefully consider whether it’s worth it in the long run. Final thoughts Successful construction businesses don’t rest on their laurels. You should always be on the lookout for ways to add to or improve your service, which is where continuous research and development is essential. Remember, growing a business takes time and effort, so stay focused and be patient.

About The Author:

Sharie DeHart, QPA, co-founded Business Consulting And Accounting (Fast Easy Accounting) in Lynnwood, Washington. She is the leading expert in managing outsourced construction bookkeeping and accounting services companies and cash management accounting for small construction companies across the USA. She encourages Contractors and Construction Company Owners to stay current on their tax obligations. She offers insights on managing the remaining cash flow to operate and grow their construction company sales and profits so they can put more money in the bank. Call 1-800-361-1770 or sharie@fasteasyaccounting.com

This Podcast Is Episode 545, And It's About The Implications Of Rising Interest Rates For Construction Contractors In the construction business world, one constant factor you are likely to encounter is change, particularly in the financial landscape. One such change that can bear significant implications for small businesses is rising interest rates. Understanding how this impacts your construction business and identifying solutions to counteract these effects can be vital to sustaining and growing your company. When interest rates go up, borrowing money becomes more expensive. This can impact your ability to make a profit on construction projects. You might have a more challenging time getting financing for new projects and have to pay more for the funding you get. Fewer people may be looking for your construction services when the economy slows due to rising rates.

Interest rates have a ripple effect on various aspects of business; let's dive deeper:

Decreased consumer spending

A crucial repercussion of rising interest rates is that homeowners invariably allocate more of their income to repay the increased mortgage rates and other loans. As a result, there's less disposable income for them to spend — this isn't great news if you are in an industry deemed non-essential or not a priority by the consumer.

Difficulty in accessing credit

Lenders may enforce stricter requirements, such as more equity or personal guarantees, in response to high business loan rates. This makes long-term and short-term debt more expensive and more complex to obtain.

Increased operational costs

The ripple effect of interest rates can also increase your operational costs. Your employees (if you have any) might demand a pay rise to cope with their increased living costs, and essential business partners might pass on their increased costs to you, raising the price of your whole supply chain.

Uncertainty in predicting future costs

Rising interest rates can make it difficult to predict the cost of future borrowing or the cost of existing business loan rates, making it harder to plan your finances and future investments.

If lenders are not confident of your business viability or see your construction business as high risk, funding debt will cost more, and interest payments will be higher. Because high interest can put added pressure on your cash flow, this will likely worsen your situation.

Your next steps

Regardless of your business's financial challenges, strategies, and resources are always available to help you overcome them.

If you're worried about the rising interest rates, don't stress - plenty of options are available. For instance, you can check out financing options with great rates and terms. It's also always a good idea to have a solid financial plan to help manage any potential impact of rising interest rates.

There are also several strategies you can employ to mitigate its impact:

1. Refinance your debt: If you have an outstanding debt with a high interest rate, consider refinancing it to a lower rate. This can help you save money on interest payments over time. Refinance high-interest products like credit cards.

2. Negotiate with lenders: If you want to take out a new loan, try negotiating with lenders to get a better interest rate. You may get a better deal with a good credit score or a strong business history. Secure new loans with a longer fixed term to protect against further unexpected increases.

3. Increase revenue: One of the best ways to combat rising interest rates is to increase your income. This can help you cover the cost of higher interest payments and keep your business profitable.

4. Cut costs: Look for ways to cut costs in your business to free up cash flow. Delay major purchases that could drain your cash reserves. This can help you pay down debt and reduce the impact of rising interest rates. Discuss with your suppliers how to work together to offset interest rate increases.

5. Diversify your investments: Consider investing in various assets, such as stocks, bonds, and real estate. This can help you spread out your risk and minimize the impact of rising interest rates on your overall portfolio.

Evaluate how susceptible your construction company is to the effects of rising interest rates and take action accordingly. Immediate steps can include paying off debts that may incur higher interest costs and investigating any government support you may be entitled to.

In summary

As interest rates rise, business owners in the construction industry may face challenges. Higher interest rates mean borrowing money becomes more expensive, making it harder for business owners to finance their projects. This can also lead to a decrease in consumer spending, which can reduce demand for construction services.

In addition, rising interest rates can increase the cost of materials and labor, which can further impact the profitability of construction businesses. As a result, it's essential for construction business owners to stay informed about interest rate trends and to be proactive in managing their finances to mitigate any potential negative impacts.

Final thoughts

While nobody knows your contracting business as well as you do, seeking expert financial advice right away is crucial for your survival in economic distress. Contact me for tailored advice so we can navigate the unsteady financial times.

I look forward to chatting with you, and hopefully, it will help you understand your current situation and also help you consider your options, implement concrete action plans, and minimize your exposure to further risk through practical strategies.

Take a deep breath and know that you've got this!

About The Author:

Sharie DeHart, QPA, co-founded Business Consulting And Accounting (Fast Easy Accounting) in Lynnwood, Washington. She is the leading expert in managing outsourced construction bookkeeping and accounting services companies and cash management accounting for small construction companies across the USA. She encourages Contractors and Construction Company Owners to stay current on their tax obligations. She offers insights on managing the remaining cash flow to operate and grow their construction company sales and profits so they can put more money in the bank. Call 1-800-361-1770 or sharie@fasteasyaccounting.com

This Podcast Is Episode 544, And It's About Why Banks Won't Lend Money To Your Construction Business

Getting approved for a business loan or line of credit is more complicated than qualifying for a personal loan. Small construction business owners must be adequately prepared to meet with a lender to present their business in the best possible light and ready for the money they need.

Think of all the times:

• You loaned money to a friend or relative
• Provided labor and materials for somebody's home or business without a deposit check
• Did change order work that you never got paid for doing and never will
• Gave a subcontractor/employee an advance on their paycheck, and you never got paid back

Multiply that by 100,000, and you will understand why banks seem so tight-fisted about loaning money.

Banks stay in business by loaning money and earning interest. They work hard to find people, companies, and contractors with reasonable credit risks they can lend money to and get paid back promptly, with all of the interest due to them. Do your best to avoid raising any of these red flags.

#1 Your Profit & Loss and Balance Sheet Reports do not conform to financial industry standards

#2 The financials tell the banker your bookkeeper doesn't understand Construction Accounting

#3 The preparer's signature on the annual tax returns is not from a qualified tax specialist

#4 You have no access to a Construction Accountant, not even for quarterly check-ups

#5 You don't have a formal documented Business Plan with a budget and projections

If you have already raised some or all of these red flags, no worries; we can help you fix most of them.

Bankers love chatting with accountants because we speak the same language as homebuilders, who love talking with sub-contractors and building material suppliers. After all, you all speak the same vocabulary.

The Risk Management Association (RMA)

1914- the Robert Morris Club (RMA) was formed to help businesses and bankers exchange credit information. It was named after Robert Morris, a signer of the Declaration of Independence, and was believed to be the primary financier of the Revolutionary War.

The RMA developed several tools; among them was a system of Ratios that we use today to study the financial statements of all companies in all industries.

The banking and lending industry has enormous databases and artificial intelligence software from places like The Risk Management Association, allowing them to separate reasonable contractor risks from bad ones. It generates recommendations based on algorithms much more complex than any gambling casino and with a much higher payoff.

One of the keys to getting a banker, lender, or bonding company to consider your construction company for financing is how your financial statements are presented. In particular, your construction company's Profit & Loss and Balance Sheet.

A banker, lender, or bonding agent logs into their RMA account, fills out electronic forms, answers questions about your construction company, and inputs specific numbers in specific blanks taken directly from your construction company's Profit and Loss and Balance Sheet. Any construction accountant knows precisely how to set up QuickBooks correctly for this process.

If a contractor gives their banker, lender, or bonding agent a set of financial reports that do not conform to the RMA requirements, they may or may not try to extrapolate the numbers needed using Excel or some other program.

In most cases, they are polite and thank you for "applying" before giving you the "We will let you know as soon as we know anything" speech. I know this because I have heard it from many bankers, lenders, and bonding agents who are frustrated. After all, they know you are an excellent client and know you are a person of integrity who can be trusted to pay the loan back on time, with all the interest.

The RMA and other reports show where your contracting company stands concerning other contracting companies serving similar geographic and demographic markets.

Each major category, Sales, Cost of Goods Sold, Overhead, Other Expenses, and Other Income, is rated on a scale of top 25%, middle 50%, and bottom 25%.

Ideally, all the numbers on your Profit and Loss and Balance Sheet fall somewhere in the middle 50%. Whenever a contractor "forgets" to declare all their income or "overstate their expenses," it will appear as a red flag.

Finally, a Z-Score is compiled, a formula for predicting bankruptcy. Edward I. Altman published it in 1968. The procedure may be used to predict the probability that a firm will go into bankruptcy within two years. Although not 100% accurate, it is a valuable tool, similar to a tape measure, which is not 100% accurate yet still practical.

This is why sometimes a contractor with excellent credit cannot get a loan or line of credit, and yet another contractor with only good credit can get financing.

Prioritize these three things for a smoother loan application:

Your business risk profile

One of the most essential parts of any business loan application is demonstrating to a lender that your company can make regular payments and repay the loan in full. If your business is profitable, you can show you're at low risk by presenting cash flow statements, a detailed business plan, and your good credit history. Some of the most common reasons a bank won't grant a loan to a small business are a lack of security (e.g., no business assets), a poor or non-existent credit history, business inexperience, and a weak business plan.

Know your credit score

It's highly recommended that you review your credit score before you apply for financing. That way, you'll know whether it might be better to wait until you're in a better position to qualify. Check that your report is complete or free of any errors that can affect your score. Your credit report includes your payment history for credit cards, equipment leases, mortgage or office rentals, electricity, phone fees, and other business expenses. A simple omission – say your internet provider, whom you always pay on time, isn't included in your payment history – can result in your credit score being lower than it should be, so be sure to correct any errors immediately.

Before you apply for financing

If you suspect a lender will decide your business is too high risk for a loan, or you've been denied financing, apply for business credit instead. Your spending limit may be low, but a credit card will allow you to build a good credit history. Pay off your balance – or, at the very least, make your minimum payment each month. Keep up with your other financial obligations, such as personal loan payments, rent, leased equipment, and any income taxes owed. Apply for a loan in six months to a year, and you'll have a much better chance of approval.

Before you apply, be sure you have all the documentation needed to support your loan application. Include in your portfolio copies of business banking statements, financial reports, a detailed business plan including projections, and a well-researched marketing plan.

It would be best if you also were prepared to discuss with a lender why you need to borrow the amount you're asking for, the term length, and how your business can afford to repay it. Make a strong case for funding by demonstrating profitability, a good credit history, and a solid business plan, and you'll be in an excellent position to qualify for the funds you need to grow your business.

Final thoughts

Hopefully, you have gained insights into the banking, lending, and bonding industries. Profitable contractors and construction company owners have known about the value of outsourced bookkeeping services and contractor coaching services like ours for a long time, and now you know about it too. Reach out to me and let's chat about your construction business; whether you need a little help or a lot, I'm just a message away.

About The Author:

Sharie DeHart, QPA, co-founded Business Consulting And Accounting (Fast Easy Accounting) in Lynnwood, Washington. She is the leading expert in managing outsourced construction bookkeeping and accounting services companies and cash management accounting for small construction companies across the USA. She encourages Contractors and Construction Company Owners to stay current on their tax obligations. She offers insights on managing the remaining cash flow to operate and grow their construction company sales and profits so they can put more money in the bank. Call 1-800-361-1770 or sharie@fasteasyaccounting.com

This Podcast Is Episode 543, And It's About Better Practices For Managing And Maintaining Construction Business Cash Flow In the business world, cash flow remains the lifeblood that keeps your operations running smoothly. Whether you're a start-up finding your feet or a seasoned business in the construction industry, managing and maintaining a steady cash flow can be challenging. But a few small changes can make a world of difference to your cash flow and overall revenue. Your business needs cash. Cash keeps your company in operation and enables it to grow, so you should know how much your business needs to survive. Although many think the answer is linked solely to operating expenses, this isn't true. No single factor determines how much cash every construction business needs to have on hand. Somewhere between 3-6 months of operating expenses is an excellent baseline to start from, but there's more to it than that. Initiate a discussion with your lenders if interest only or deferred payments on outstanding debts are possible. Request more flexible payment options It never hurts to ask, especially if you've been transacting with your vendors for a long time and you've established a certain level of mutual trust and confidence. You can request more flexible payment options or longer payment terms. Tap into available credit lines Take advantage of available lines of credit and place the funds in interest-bearing accounts. Assessing your cash flow is fundamental to better understanding your business's financial health. Let's dive into some practical strategies you can implement to boost your cash flow. Make invoicing a priority -get paid faster and aggressively follow up on invoices. Receiving speedy payments is crucial to improving your cash flow. If you typically invoice your customers, consider offering them an incentive to pay earlier than the standard 30-day payment period. A small discount of 5% could encourage them to settle their bills within ten days. Small businesses in the construction industry are at risk of having their clients not pay them on time—or at all. Being too passive in collecting unpaid invoices or reminding clients when payment is due will not help you collect the money you need to pay your bills. Sending out reminders of due invoices can speed up getting you paid and encourage clients considering not paying you to reconsider. Reach out to clients if necessary to discuss payment options. Even a payment schedule is better than no payment at all. Invoicing should be a regular part of your business day. Adopting a same-day or next-day invoicing practice can ensure you're on top of your receivables. Additionally, consider emailing invoices as a supplement to regular mail. If you have customers who are habitually late, don't hesitate to remind them regularly about payments. Use business credit cards. Using business credit cards to pay suppliers or make purchases can also help manage cash flow. Most credit cards offer a grace period, sometimes up to 25 days, allowing you to settle the statement balance without incurring interest. Some even come with cash-back features. Watch for scope creep. Scope creep occurs when clients or stakeholders change a project's goals or deliverables. Almost all projects experience some form of scope creep, but too many changes to a project can severely impact your bottom line and hurt your cash flow. Make sure the terms of your project are set out clearly, and let clients know that any changes to the project will result in additional fees. If clients attempt to change the project, you can remind them about the original agreement and the extra costs. If they insist on making the changes, you can charge the agreed-upon amount. Invest in today's technology. Investing in modern bookkeeping software or invoice management services can help streamline your receivables and expedite customer payments. While it may seem like an additional cost, this investment can offer tremendous cash flow benefits in the long run. Many software solutions can help you understand your company's cash flow. They can help you build projections and get a real-time view of how your business is doing. This information can then be shared among company managers so everyone knows how the company is doing financially and where strategies need to be put in place or altered to get you back on track. Additionally, invoicing and project management software can encourage faster, more manageable payment from clients and keep projects on budget. This will also improve your cash flow. Consider delegating the financial tasks. Many construction small business owners become self-employed because they have construction skills, not because they want to be businessmen. The financial aspects of a construction business are complex and take much time and planning. That can add demanding responsibility to the business owner. Hiring someone to take care of the financial aspects of your business or even to advise you about the decisions you face can take the stress off you. That's precisely how we can help. Having someone on your side with the financial expertise and construction experience to assess your business, advise you about your cash flow, and help you secure funding. With the time and money you'll save, it will be worth it in the long run. Final thoughts Remember, cash flow is king in the business world. Assessing your cash flow is fundamental to better understanding your construction business' financial health. Implement these simple yet effective strategies to maintain a positive cash flow and drive your business toward success. Need help with managing your cash flow? Get in touch with us now.

About The Author:

Sharie DeHart, QPA, co-founded Business Consulting And Accounting (Fast Easy Accounting) in Lynnwood, Washington. She is the leading expert in managing outsourced construction bookkeeping and accounting services companies and cash management accounting for small construction companies across the USA. She encourages Contractors and Construction Company Owners to stay current on their tax obligations. She offers insights on managing the remaining cash flow to operate and grow their construction company sales and profits so they can put more money in the bank. Call 1-800-361-1770 or sharie@fasteasyaccounting.com

This Podcast Is Episode Number 542, And It's About What Is A Fractional CFO And How Can It Help Your Construction Business? A fractional CFO, or Chief Financial Officer, is a finance professional working part-time, retainer, or contract. They bring the experience and expertise of a high-level CFO to your business – without the cost of hiring a full-time, in-house employee. Fractional CFOs service several clients simultaneously, typically on a part-time, retainer, or contract basis. Their specialty is providing outsourced CFO services to small and medium businesses. Because their financial management skills are so well-developed, it's common to bring one on board to help navigate a challenge. Every construction business can benefit from dedicated financial management expertise, but very few small companies have the means to hire someone full-time—particularly in the lean early years. Unfortunately, it's those first few years when a company is just starting up that establishing good habits with managing financial resources is so important, and, over time, can even make or break a construction business.

Outsourcing a CFO is affordable for business owners like you who recognize the need for a financial expert with construction business experience. CFOs provide top-level advice when needed, offering incredible value and cost savings to companies focused on growth and long-term success.

But what happens when you hire a CFO without a construction business experience? At the very least, you and your CFO would constantly struggle between having all the documents needed for data entry and providing the tools to the Bookkeeper to deliver the reports correctly.

As a construction business owner, you want answers to the following questions:

• Am I making any money?
• Where am I making any money?
• Why isn't there a report that gives me all the answers at the push of the button?

Furthermore, a financial challenge sometimes comes beyond your team's skill or experience level. This is where a fractional construction CFO can be of great benefit. Some of the issues they assist with include:

• Cash flow problems
• High expenses
• Existing systems that are no longer working
• Cost-cutting analysis
• Getting through an audit

Hopefully, these situations don't come up often, but when they do, it's beneficial to have an expert on your side to guide you through.

Your small construction business might want to consider the benefits of working with a fractional construction CFO.

Achieving goals

A fractional CFO can help you realize your dreams by deciphering the numbers. They will look at where you are now and help you plan where to go next. This includes:

• Ensuring the books are in order
• Performing financial forecasts
• Helping with strategic relationships
• Overseeing due diligence

There are plenty of ways a fractional CFO improves your operations. The specific skills and experience they provide will clarify your situation and help you achieve what you want.

Managing growth

Taking your construction business to the next level can seem daunting. You want to grow but don't want to risk your success by taking on too much or making a damaging misstep.

A CFO will help you navigate the steps ahead. If you're already growing at a rate that makes you feel like losing control, they will help you retake the reins.

A fractional CFO will help by:

• Breaking down large amounts of financial information into helpful data
• Making a plan to develop existing employees and their skills
• Identifying the need to hire new employees to manage growth
• Implementing systems that will work in the future
• Exploring causes of revenue loss and cost overruns and developing solutions to address them

Ultimately, a fractional CFO is helpful to guide you through the growth process so that you can feel confident as your business expands.

High-level decision making

A CFO can analyze your construction company finances and provide expert advice to help you make more informed, strategic decisions for ongoing profitability. That senior-level financial oversight can help you understand any risks or weak spots, identify opportunities, and create a realistic and actionable business plan that steers the company precisely where you want it to go.

Managing risk

Your business is an asset that needs protection from any potential risk that may threaten its ongoing success. A fire or flood, cyber attack, or employee theft can all cause long-term damage if you don't protect your business. A CFO can undertake a risk assessment and ensure that you invest wisely, have appropriate insurance, and secure sensitive data, equipment, and inventory.

Field tools are a given. The truck has a rack for ladders and lumber. Vans have shelves and bins; they are tall enough to stand in, saving wear and tear on employees' knees. Less strain on knees can keep or postpone possible Worker's Compensation claims. Worker Comp claims lead to increased premiums.

Once the Tools and Equipment are updated, it is much easier to see which employees are productive.

In the Field – Who is bringing their jobs in on time, under budget is reasonable. Jobs without warranty work and signing billable change orders add to the bottom line.

Simple Efficiency is a "Win-Win" for everyone:

• The Contractor Owner receives the reports needed to make good, proactive decisions.
• The CFO has a smooth-running operation and can focus on the "Money Management" duties necessary to run the business.
• The Office Manager or Bookkeeper can efficiently enter the day-to-day paperwork into the QuickBooks file, answer the phones, and complete other daily tasks without frustration.
• The Field Staff know they have turned in all their paperwork (paper and digital) in a timely fashion with limited stress and are greeted warmly by the Office Manager or Bookkeeper.
• Everyone is ending their day on a "Happy Friendly Note" and looking forward to tomorrow.

Everyone Wins When:

1. The Contractor Owner knows the accounting records are accurate and can make decisions

2. The CFO can be confident that clients are billed, and no one is paid twice.

3. The Office Manager or Bookkeeper can easily track Job Costing and Timecards

4. The Field Staff stays on top of the job and gets signed Change Orders

5. The Customer is happy with an excellent job without any warranty work.

Final thoughts

When you hire a fractional CFO, you decide how often their services are required and only pay for the services you need. Hiring a financial expert on contract is a cost-effective solution for construction businesses that only need part-time support.

Staying on top of your company's financial management is a struggle for many small business owners, who spend much time attending to clients and profit-generating activities.

Working with a team of accountants, bookkeepers, and a CFO can help you better manage the most critical aspect of your business for ongoing growth: your bottom line.

About The Author:

Sharie DeHart, QPA, co-founded Business Consulting And Accounting (Fast Easy Accounting) in Lynnwood, Washington. She is the leading expert in managing outsourced construction bookkeeping and accounting services companies and cash management accounting for small construction companies across the USA. She encourages Contractors and Construction Company Owners to stay current on their tax obligations. She offers insights on managing the remaining cash flow to operate and grow their construction company sales and profits so they can put more money in the bank. Call 1-800-361-1770 or sharie@fasteasyaccounting.com

This Podcast Is Episode Number 541, And It's About The Value Of Documenting Effective Construction Business Systems Many entrepreneurs operate with their business processes and systems in their heads. They know what they must do daily and how they want to get things done. Unfortunately, when a construction business grows, and staff need to be hired – or the owner needs to take time away from the company – it's an absolute liability not having processes and systems documented in one place. To be in business and to remain in business, become a business person! To run a construction business, you must be business-like. It's not sufficient just to be very good at what you do. Many people who are 'very good at what they do' have failed. The familiar cry: "I'm far too busy for that," is also no excuse. Are you 'too busy' to be a competent businessperson? If so, your construction business won't last long. You must continue to develop your business skills.

To be a businessperson, you must try to become an all-rounder, not just a specialist player. You can offer outstanding goods or services, but if you don't develop sound business systems, you are not a fully rounded businessperson, and your construction business will be in danger of failing.

Remember that other stakeholders in your business - such as the building material suppliers who give you credit and the bankers who extend loans and financing terms, are constantly assessing your business skills. If you consistently pay people late or can't meet the duration of your debt agreements, they will draw obvious conclusions about your business skills.

Here are the top five reasons to record your company processes and systems so your business can run more efficiently and effectively even when you're not there.

1. Improve efficiency

When you sit down to record your processes and systems, you may discover gaps where improvements could be made. You might find better ways to perform routine tasks, reducing bottlenecks and eliminating extra steps. You may decide that some tasks are too time-consuming, and you'd save time and money switching to an automated solution. Reviewing how you do things as you record systems can help create better systems, improving productivity.

2. Support staff training

When hiring new talent, a systems manual can dramatically reduce the time you spend training. Documenting your processes can also ensure that jobs are consistently performed to a high standard. Sharing your procedure guidelines can help new employees and casual staff quickly get up to speed on expectations and give them a reference to check before asking questions.

3. Sell your systems

Develop a unique turnkey system that other construction businesses can implement to save time and cut costs, and you can increase profits by selling your operating manual. Those documented processes are part of your company's intellectual property and can be licensed like your brand name.

4. Getaway

One of the perks of running your own business is setting your schedule. But without systems, it can be challenging to get away for a vacation, let alone retire. To build a company that can run without you, you need to be able to delegate the tasks and processes to someone else with confidence that they'll be performed correctly and consistently. Another excellent reason to make sure your systems are recorded and your manual is updated regularly.

5. Sell your business

When it comes time to sell your construction business, you'll get top dollar if you can provide a buyer with an operating manual. A potential buyer wants to know that the company will continue to run smoothly without you throughout the transition period and that institutional memory will be retained when there's staff turnover. The greater ease with which someone can step in and operate the business, the greater the value and the higher your compensation when you're ready to sell.

As we've seen, several excellent reasons exist to review your systems and record them, even if you're just starting. You might update it yearly, just like your business plan, to discover best practices and ensure it maintains its usefulness to you and your staff.

Too many businesses fall over because the owner has not established efficient business systems. This typically happens because the business owner is so caught up in the day-to-day running of the business that the fundamentals of good business management get forgotten. It must be often said that the owner doesn't like bookkeeping or other administrative tasks, so these get put on the back burner.

The symptoms are familiar, and their results are disastrous:

• Poor or non-existent record-keeping.
• Tax obligations are not met.
• Invoices go out late, and debts remain uncollected.
• There is one cash flow crisis after another.
• Goods and services are incorrectly costed and priced.

Any of these factors can lead the business down the slippery path to failure, but all are avoidable. The whole point about using sound systems is that they free you to spend more time working ON your business, not in it.

How good business systems will help you?

Good systems will make your construction business more substantial, efficient, and manageable. They will also make your business far more attractive to future buyers because if you have developed clear operating and procedure manuals, the business will be seen as an independently viable unit and less dependent on you.

Consider, for instance, what makes franchises so successful: they are designed so that people can buy a proven system and operate it after minimal training. They can do this because the business procedures are captured in simple, clear operating manuals.

You don't have to be an expert at everything in your construction business. For example, you might hate bookkeeping. Okay—but do get someone else to do it for you; don't rely on a shoebox for your accounts! And you should at least understand the processes and the overall accounting picture, even if you don't want to do the 'drudge work' yourself.

Final thoughts

Large, profitable construction companies have known and used some form of Business Process Management (B.P.M.) for hundreds of years. We've always used M.A.P. to help our clients find the treasure hidden inside their construction business. (You can download our free toolkit here if you haven't done so).

Having poor systems is the road to stress and burnout. On the other hand, good business systems will enable you to work smarter, not harder. They free you to work on your business rather than in it. That way, you're more likely to avoid burnout, and you'll be able to take time off work because you can train others to follow your documented systems and procedures. Build a better construction business and liberate yourself from it.

About The Author:

Sharie DeHart, QPA, co-founded Business Consulting And Accounting (Fast Easy Accounting) in Lynnwood, Washington. She is the leading expert in managing outsourced construction bookkeeping and accounting services companies and cash management accounting for small construction companies across the USA. She encourages Contractors and Construction Company Owners to stay current on their tax obligations. She offers insights on managing the remaining cash flow to operate and grow their construction company sales and profits so they can put more money in the bank. Call 1-800-361-1770 or sharie@fasteasyaccounting.com

This Podcast Is Episode Number 540, And It's About Key Financial Concepts For Construction Company Owners Not everyone knows construction accounting, and it is easy to assume all accounting is the same. Even if you have outsourced your financial functions, as a small construction business owner, having a solid understanding of critical financial concepts is crucial to work with your advisor and 'speak their language". This article outlines several essential concepts that every small business owner should know. Construction is a tricky business, and people's failure is expected. Most of our clients have either failed or come very close. It doesn't matter how many times you are knocked down; it only matters that you learn your lessons, get up, and go again. We noted these lessons years ago, owning and operating our construction company. By building a system and gaining insight from us, you can pick up from our mistakes, which you don't have to go through and can start avoiding before it comes crashing down.

Get that one thing working, then move on to the next one. What is the most annoying thing you can quickly fix? We talk about accounting because that is our primary focus.

Start with the basics:

• Open a business checking account.
• Use a dedicated credit card for the business (if using a personal card).
• Create invoices, present them to your customers, collect the money, and get it in the bank (Do you have an easy way for your clients to pay you?).
• Collect the money ASAP because, without cash flow, you are out of business.

Basics of income and expenses

As a construction business owner, you must understand how you generate and spend money. This way, you can maintain fiscal responsibility while also promoting business growth.

Income statements (Profit & Loss) versus cash flow

Business owners should always stay on top of the latest cash flow analyses and projections to make smart short-term financial decisions. Remember, a P&L doesn't tell you if you can pay your bills or how liquid your business is. Keep that in mind!

Operating cash flow

Understanding a company's operating cash flow is vital for assessing its performance and cash runway.

Gross sales versus net profits

As a small business owner, paying attention to sales and expenses is vital to ensure a healthy and well-managed business. Remember, gross sales don't equal net profits. Understanding every expense, knowing the industry averages, and having enough cash to thrive long-term are crucial.

Reading a balance sheet

It's important to understand the line items on a balance sheet. Taking a deep dive into these details can provide valuable insights into your financial well-being. Soon, you will instinctively know if something doesn't look right.

Return on equity

This concept helps us decide whether to keep investing in the business or look into other investment options. You see, there are always opportunity costs to consider for every investment.

Materials

A construction contractor may purchase material and resell it to their customer. Thereby thinking it is a reimbursable expense. (You lose money when doing this).

Remember all invoices to the Customer (Retail, General Contractor, Spec Builder, Developer) are income. Every line item on a customer invoice is ALL INCOME. If the words are on the invoice, then the invoice is either taxable or non-taxable based on other factors. Washington State, for instance, has a clear explanation.

Purchases for the material are Cost of Goods Sold or are expenses if you are short-cutting your accounting. I have seen financial statements backed out because they will reflect reimbursable income as a negative number, thereby showing it as a deduction. (The net effect is double dipping on the expense side.) The cause is that the accounting software is not correctly set up.

Cost of goods sold

It's imperative to clearly understand the cost involved in producing your products or services. If you're unsure how much it costs to provide your services, it's hard to know how much you'll have left to cover your overhead expenses.

For example, a material receipt arrives at the regular bookkeeper's desk from a lumber supplier, and they open the QuickBooks contractor file, look up the supplier to determine how the previous lumber purchase was coded, and proceed to code the new transaction the same way.

The problem is that each transaction is unique and could go into any of a dozen accounts or item codes depending upon whether it is a direct cost, indirect cost, WIP, retention, warranty, overhead, administrative, or other costs, or simply an expense. The cumulative effect of these bookkeeping errors in one month can do enough damage to the financial and job cost reports to bankrupt a contractor eventually.

Accounts payable and accounts receivable

Managing cash flow through digital tools for accounts payable (AP) and accounts receivable (AR) is crucial. After all, cash is king for small businesses!

No - the company with the most Accounts Receivable or Accounts Payable does not win a prize.

• Accounts Receivable means your customers owe you money.
• Accounts Payable means you owe money to your suppliers.
• Net Profit is the money left over. You want lots of Net Profit!
• You are not a banker! Stop borrowing money using your credit cards, Loans, and Lines of Credit, then finance customers' projects at 0% interest.

Working capital

Monitoring working capital is vital for ensuring the business has enough funds to operate smoothly. You can get loans if you can't get enough working money because of seasonality or other external factors. A working capital ratio between 1.2 and 2 signifies a healthy business to lending companies. The operating capital ratio shows the percentage of assets to liabilities, i.e., how often a company can pay off its current liabilities with its existing assets. The working capital ratio calculation is Working Capital Ratio = Current Assets / Current Liabilities.

We are deeply passionate and committed to the construction industry and want to support you, our clients, and our readers to achieve your definition of success. Whether you're a contractor, owner, spouse, business professional, bookkeeper, or accountant, we understand your frustrations because we've been where you are now and are here to help.

We have proudly produced 12 classes in our Construction Accounting Academy. Each course was designed for QuickBooks users from all levels - Beginner to Experienced. Our goal is to provide the student with suitable and valuable information to build a construction accounting system specific to their type of construction business and company role.

As with every type of business, having the right tools can help you work efficiently and effectively. The key to your business profitability lies in understanding the critical concepts of construction accounting. Now that the tools are available online and accessible 24/7, it's up to you to leverage and implement the power of knowledge.

To wrap things up

A solid understanding of these key financial concepts enables you to make informed decisions, effectively manage your finances, and strategically drive your businesses' growth and long-term success.

With financial acumen, you can identify expansion opportunities, mitigate risks, and build a sustainable foundation for your business ventures.

Don't navigate your finances alone – we're here to help.

About The Author:

Sharie DeHart, QPA, co-founded Business Consulting And Accounting (Fast Easy Accounting) in Lynnwood, Washington. She is the leading expert in managing outsourced construction bookkeeping and accounting services companies and cash management accounting for small construction companies across the USA. She encourages Contractors and Construction Company Owners to stay current on their tax obligations. She offers insights on managing the remaining cash flow to operate and grow their construction company sales and profits so they can put more money in the bank. Call 1-800-361-1770 or sharie@fasteasyaccounting.com

This Podcast Is Episode Number 539, And It's About Construction Company Contract Traps And The Advantages Of Legal Help Mistakes can be expensive in the construction business, and as an entrepreneur, although you'll know many of the regulations that apply to your business, there are so many that you can't possibly remember all of them. Depending on the type of contracting business you run, you could face laws regarding taxation, employment, product liability, premises liability, discrimination, health and safety, and various other regulations. Keeping on top of all the laws that affect you and the changes to those laws while still being mindful of all the other aspects involved in running a business is almost impossible. That's why you need legal help. A legal professional can identify the rules and regulations that apply to your business and advise you on operating within those laws. They can also help you draw up necessary contracts that could prevent legal action in the future, and they can prepare a case in the unfortunate event that you wind up facing or filing a lawsuit.

For instance, a new contractor meets an experienced customer, and money changes hands, not how you expect it.

Typically, this happens when you first get started: You bid on a project and are the low bidder. You are given the client's standard contract, which contains the client's favorite set of commercial terms and conditions, to sign as a condition of getting the project. You close and sign the contract because you don't want to ask for changes in the terms or consult your construction attorney. You put the signed contract in your bottom desk drawer and pray that nothing will happen during the project that will cause you to reread the contract.

Before it is too late, consider these contract traps to look out for:

1. Poorly defined scopes of work create claims and disputes.

2. The completion schedule is too short and exposes you to monetary damages for failure to finish on time.

3. Payment terms put you in never-ending negative cash flow by loaning the customer money at 0% and borrowing on your credit cards at 24%.

4. The customer keeps 5%-10% of the contract price as retention for up to a year or more after the entire project is finished, which could be all your profit.

5. Indemnity clauses could make you financially responsible for bodily injury and property damage claims caused by customer negligence.

6. Indemnity clauses could make you pay the customer's attorney fees and costs.

7. Your insurance company may be required to provide additional insured coverage for the project, giving the customer free insurance and full access to the policy coverage and limits.

8. Often, the terms and coverage of the warranty are beyond reasonable industry standards.

9. Dispute resolution clauses that require arbitration first and then litigation are probably the two worst ways ever invented to resolve disputes.

10. The client's pre-printed final waiver of the lien document (necessary for the contractor to receive final payment) waives all contractor's rights to recover unpaid extra work and to pursue any claims that arose during the project.

Here are three reasons you need a professional to help.

They help set up your construction business

In the early stages of your business, they can help you make vital decisions and understand the consequences of those decisions. Is your business going to incorporate? Do you know what that means from a legal standpoint compared to other business entities? Do you understand the difference between hiring employees and working with contractors? Do you know the employment laws surrounding hiring and firing if you hire employees?

Law experts understand each of those and can explain how they affect your business. They can help you make an informed decision that is in the best interests of your organization and protects you in the future.

They help with contracts

At some point, your business will enter into contracts. Whether those are employment contracts with employees, service contracts with clients, or business agreements with other partners, you will need legally-binding documents to protect yourself.

Not all contracts are easy to read or understand, and some may have confusing clauses. They will help determine if the contract is in your best interest and if there are inclusions you need to know about—such as whether parts of the contract can be assigned to third parties or how to terminate the agreement. They can also revise the contract or change anything you deem problematic.

If you're drawing up the contract, getting a qualified legal opinion can ensure the agreement represents your needs and goals. This will definitely prevent experiencing contract traps, as mentioned earlier.

We recommend seeking the advice of a qualified construction attorney to put together a contract that fits your specific needs. Your arrangements need a well-defined scope of work, clear payment terms, a reasonable schedule, and a proper change order clause. No work should ever be performed based on verbal agreements. Get everything in writing, always, with no exceptions.

They help prevent lawsuits

When you own a small business, there's always a chance you'll wind up in litigation. You could have a dissatisfied customer or an angry former employee. You may file a lawsuit because someone else infringes on your trademark or copyright.

Usually, there are steps you can take in those situations before filing or facing an expensive lawsuit, and a lawyer can help you navigate those steps, possibly avoiding the cost of going to court. If you wind up in court and already have legal representation, that person will be familiar with your business, making representing you much more manageable.

Many small construction business owners and entrepreneurs wait until it's too late to seek help. They wait until a lawsuit has been filed or need to file it. A lawyer can advise you of ways to avoid those situations in the first place, saving you unnecessary legal expenses in the long run.

Final thoughts

Yes, attorneys cost money. The benefits of having one, however, far outweigh the expenses. They will not only advise you on business decisions and contracts that protect your business in the future; they will help defend your construction company, product, or yourself if a lawsuit arises, either with you as the plaintiff or the defendant.

Smart construction business owners know there is a time and a place to spend money. Spending your money in intelligent ways saves you time and energy. It can save you money in the long run by reducing turnover and preventing costly mistakes.

About The Author:

Sharie DeHart, QPA, co-founded Business Consulting And Accounting (Fast Easy Accounting) in Lynnwood, Washington. She is the leading expert in managing outsourced construction bookkeeping and accounting services companies and cash management accounting for small construction companies across the USA. She encourages Contractors and Construction Company Owners to stay current on their tax obligations. She offers insights on managing the remaining cash flow to operate and grow their construction company sales and profits so they can put more money in the bank. Call 1-800-361-1770 or sharie@fasteasyaccounting.com

This Podcast Is Episode Number 538, And It's About Pros And Cons Of Working With Family And Friends In Construction Ever dreamed of starting a family business? Investing in a franchise opportunity with friends? Businesses owned and operated by families can have incredible staying power. All family-owned companies, Volkswagen, Samsung, and Nike, are among the world's most successful, leading brands. Working with family and friends can be fun and rewarding, especially in the construction industry. I know because we've been in one. But before you hire the people you care about most, it's wise to consider the pros and cons.

Pro: Dynamics

When you hire family and friends, working together can feel comfortable and pleasant. You can vouch for their work ethic and values upfront. You already know their natural talents, abilities, preferences, and skill sets – their strengths, weaknesses, and how you can best work together.

Con: Dynamics

Regarding family and friends, modifying negative behavior or communication patterns can be challenging. What's more, it can be complicated to confront a loved one when they aren't acting in the company's best interest. The temptation to avoid conflict or hurt feelings can make managing a friend or relative tricky at best – at worst, it can become a severe liability.

Always practice clear communication. Share business policies, practices, and expectations just as you would with any employee.

Pro: Streamlined hiring

You'll save time and money when you have a crew of committed workers ready to go before you're set to launch. With family and friends willing to help you, you won't have to screen and interview candidates – or spend precious time following up on background checks and qualifications. You can hit the ground running, focusing on generating income and profit.

Con: The company has to come first

Building a profitable and sustainable business requires effective management without exception. That means sometimes it may be in the company's best interest to re-train an employee for a different role, ask a worker to take on additional responsibilities – or, in some cases, to let someone go.

When it comes to complex personnel matters, it can help to seek guidance from an independent advisor.

Pro: Tradition is seen as a strength

Strong brands are quickly built on the values we associate with family, such as honesty, trust, and enduring relationships. A recent study showed customers prefer family-owned businesses for their perceived stability, trustworthiness, and consistent service.

Con: Too much tradition can hold you back

When a family business does things as they've always been, the company can suffer from a lack of diversity and innovation. It's essential to keep an eye on market trends and changes in your industry, so you can adapt quickly and avoid missing opportunities.

Solution: Set up a board consisting of family members and an equal number of independent advisors.

A note on the spouse doing the construction bookkeeping and divorce

Here is what we see repeated many times over. Contractors cross the line and treat their spouses as indentured servants who should be grateful for a place to live, eat and sleep in exchange for maintaining a household and being an overworked, underpaid contractor's bookkeeper. They become incredibly frustrated and desperate.

In some cases, you are not at fault; you are being hammered by customers who are doing everything they can to drive the price of everything and everyone into the ground in a twisted attempt to get something for nothing, and I have a suggestion for how to fix that.

The answer is simple. We have helped save many marriages by working with contractors' spouses and showing them how to do what they are good at, like managing the money, paying the bills, customer service, and other management tasks, and letting us take care of the contractors' bookkeeping services.

Having your spouse handle construction bookkeeping can be a recipe for disaster. Mixing business and personal relationships can lead to conflicts of interest and communication breakdowns. It's best to keep these two areas of your life separate to maintain a healthy work-life balance and avoid potential complications down the line.

Ultimately, going through a divorce after being in the construction business together can be challenging. It's not just about separating personal and professional lives, dividing assets, and determining who gets what. It's important to approach the situation with a level head and seek legal counsel to ensure a fair and amicable outcome.

Remember to prioritize the well-being of any children involved and communicate openly with your former partner to minimize conflict. It may be a difficult process, but with patience and cooperation, you can move forward and begin a new chapter in your life.

Having family and friends involved in a business can have advantages and disadvantages.

On the one hand, having family members or close friends as business partners or construction crew can provide a sense of trust and loyalty that may not be present with outside partners. It can also be easier to communicate and make decisions with people you know well and trust.

On the other hand, working with family and friends can also lead to conflicts and emotional tension that can spill over into personal relationships. It can be difficult to separate business and personal disagreements, which can quickly become heated and damaging. Additionally, working with family and friends may limit the pool of talent and ideas available to the business, as outside perspectives and expertise may be overlooked.

Whether involving family and friends in a business is beneficial depends on the specific situation and individuals involved. It is essential to consider the potential risks and benefits before making any decisions and to prioritize clear communication and boundaries to maintain healthy personal and professional relationships.

Final Thoughts

Because family members and friends are personally invested in your business – both emotionally and financially – they can make fantastic employees. They'll work hard, put in the extra hours when needed, and do everything they can to ensure your venture succeeds.

The biggest challenge can be to draw the lines between work, family, friendship, and home. As an employer, it's crucial that you set boundaries, practice clear communication, and be willing to make difficult decisions so your business and personal relationships can thrive.

About The Author:

Sharie DeHart, QPA, co-founded Business Consulting And Accounting (Fast Easy Accounting) in Lynnwood, Washington. She is the leading expert in managing outsourced construction bookkeeping and accounting services companies and cash management accounting for small construction companies across the USA. She encourages Contractors and Construction Company Owners to stay current on their tax obligations and offers insights on managing the remaining cash flow to operate and grow their construction company sales and profits so they can put more money in the bank. Call 1-800-361-1770 or sharie@fasteasyaccounting.com

This Podcast Is Episode Number 537, And It's About How To Safeguard Your Construction Company From Employee Expense Fraud As a small business owner, you always look to keep your company running efficiently. Expense reimbursement fraud is the last thing you want to face. Not only can it hurt your bottom line, but it can also damage your construction company's reputation. Here we discuss employee expense fraud, the reasons behind it, and, most importantly, how to prevent it from happening to your construction business. What is expense fraud? Expense fraud is submitting falsified or inflated expense claims to receive reimbursement from the employer or avoid paying out of pocket. It is illegal, unethical, and detrimental to your business.

Employees can commit expense fraud in several ways, such as using personal expenses as business, submitting fake receipts, inflating costs, duplicating submissions, falsifying mileage, and using company funds for personal use.

Why do employees commit expense fraud?

There can be multiple reasons behind expense fraud. Financial gain is the most common motivation, but some employees may do it for personal reasons, misunderstanding of policies, pressure to achieve targets, or simply apathy.

As a business owner, it is essential to understand the reasons behind expense fraud, as it can help you identify and address them proactively.

Understand The Employee Theft 10-10-80 Rule - Discovered over many years of experience and first-hand observation by auditors, accountants, fraud examiners, and anyone involved in detecting employee theft.

Ten Percent of all employees, including bookkeepers, will steal in various ways from office supplies, petty cash, graft, kickbacks, and payoffs from your suppliers, vendors, and sub-contractors, and even hundreds of thousands or even millions of dollars. They will do it regardless of how many security systems are in place because they lack integrity. They cannot be stopped, only caught! And only then, if you have systems in place and can convince the criminal justice system to take action, good luck with that!

Ten Percent of all employees, including bookkeepers, will never steal because they have integrity and a "Producer's" paradigm. Ultimately, these people will add so much value to your company that you cannot help but reward them with more money, benefits, and recognition. Because if you do not, they will be recruited by your competitors.

Eighty Percent of all employees, including bookkeepers, will steal if they feel confident they can get away with it and if circumstances allow for it due to weak integrity and a sense of "Redistributing The Wealth, But Not The Work Or The Responsibility."

Signs to watch out for your employee:

• Asks for signature authority on your checking/savings/payroll accounts
• Has a lifestyle that seems above what they are earning
• Takes Records Home to work on, or they want to work in the office when no one is around (Fraudulent activities are more accessible when nobody is around)
• Gets defensive when you or your CPA asks questions.
• Has access to your credit/debit cards
• Your bookkeeping is a complete mess, and you cannot understand it.
• Tries to explain away delinquency tax notices.
• Is the primary contact for your company's banks, auditors, creditors, etc.
• Misplaces payroll receipts, deposit records, supplier letters, and estimates.
• Makes bank deposits, and they seem to be too small.
• Show signs of drinking, drug, gambling, or family financial problems.
• Suggested they could save money by eliminating the outside accounting firm.
• Gets angry when you ask for a QuickBooks report.
• Tries to blame the previous Bookkeeper or outside accounting firm for messy QuickBooks.
• Does not get along well with other employees and staff members.
• There are more warning signs, so be aware of and action steps you can take.

How can you effectively prevent expense fraud?

The first step in preventing expense fraud is to have a comprehensive and clear expense policy. It should be up-to-date, relevant, and easily accessible for all employees.

Ensuring that the policy covers all necessary expenses, acceptable limits, documentation requirements, and reporting procedures is essential. It would be best to encourage employees to ask questions or seek clarification regarding the policy.

Require detailed receipts and proper documentation to support the expense claims. Expense receipts should be original and include the date, amount, vendor name, and a clear description of the expense. For instance, credit card statements are not acceptable as receipts because they need to provide detailed information about the payment.

Conduct regular audits of expense reports to identify any patterns or suspicious claims. Audits not only help you detect fraudulent activities but can also identify internal control gaps or process deficiencies. Providing policy training and raising awareness of employees regarding business ethics can also help prevent expense fraud. All employees should be trained on these measures and regularly communicate a zero-tolerance policy for fraud and misconduct.

Additionally, implement systems for reviewing and approving all expenses and ensure checks and balances are in place to prevent unauthorized spending. By taking these steps, we can maintain a culture of integrity and honesty in your business and protect your construction company's reputation.

You can leverage expense management software that automates the expense reporting process, thereby reducing errors and improving efficiency. It can also help monitor suspicious activities, such as multiple submissions for the same expense or expenses exceeding the allowable limit.

Final thoughts

Preventing expense fraud requires a collective effort from construction business owners, project managers, and employees.

Having a clear and comprehensive expense policy, encouraging ethical culture, conducting regular audits, and leveraging technology can help prevent expense fraud. By implementing suitable prevention measures and promoting ethical conduct among employees, you can reduce the risk of expense fraud and protect your business from potential financial and reputational losses.

Don't let expense fraud be a hidden cost in your business. If you need help creating policies or want to review your existing expense processes, we're here to help. Reach out to us today!

About The Author:

Sharie DeHart, QPA, co-founded Business Consulting And Accounting (Fast Easy Accounting) in Lynnwood, Washington. She is the leading expert in managing outsourced construction bookkeeping and accounting services companies and cash management accounting for small construction companies across the USA. She encourages Contractors and Construction Company Owners to stay current on their tax obligations. She offers insights on managing the remaining cash flow to operate and grow their construction company sales and profits so they can put more money in the bank. Call 1-800-361-1770 or sharie@fasteasyaccounting.com

This Podcast Is Episode Number 536, And It's About How To Handle Construction Client Debt So You Get Paid On Time

If your customers owe you money, the faster you can obtain it using effective collection tactics, the better. Ideally, you want to reduce the chance of bad debts and pressure on your construction company's cash flow.

It can be easy to neglect to manage your debtors when you're busy growing your business, but intelligent credit control is important. So it's crucial to have the skills to handle the people who owe you money well, especially if you want to avoid taking them to court.

When negotiating contracts with clients, try to set payment terms that help your cash flow, such as deposits or progress payments. Dealing regular payments for contracts that take months to complete has two purposes: it gives you cash flow to match your expenses and protects you from total loss on a project if the customer goes into liquidation.

Please include a timetable for the customer to pay invoices as part of any agreement. Agree on clear milestones for the work to be completed to minimize the chance of the customer disputing any invoices.

Successful debt collection is about good processes.

As with most things, prevention's better than a cure. If you have good processes in place for collecting debt, the less likely it is that you'll have to chase debtors. And if you do, having the proper procedures to follow up on late payers makes it much more manageable.

1. Tighten your credit control

Having stricter control over new debtors is the best way to limit your exposure to future bad debts. So make sure that you:

- Ensure your business completes comprehensive reference checks before offering credit to new customers.

- Set fair credit limits – and ask your staff members to notify you if a customer wants to exceed their agreed limit.

- Approve any additional credit extensions in advance.

Make sure you state clear payment conditions in your terms of trade agreement.

Make use of credit checks – this can be especially important for new businesses that feel pressure to gain customers. Try to avoid being careless with credit checks. It might come back to haunt your business in the form of cash flow problems up the road.

Terms of trade – implement a system whereby new customers must sign their acceptance of your terms of trade before you offer them credit. Follow up by emailing (and any changes) annually to refresh their memories.

2. Structure payment terms

It's essential to put together your payment terms to encourage prompt Payment. You could, for example, offer a 2% discount for customers who pay within 21 days.

Ensure that your terms of trade state exactly when you'll start charging interest on any overdue amounts and the rate you'll be charging. Don't yield to customers even if Payment is only a day late.

Whether you decide to make any exceptions for those customers that usually pay promptly is up to you – but be clear that it's a once-only exception because you value that customer's business relationship.

3. Good organization is vital

You'll come across as an astute businessperson who takes Payment collections seriously if you systematically show your clients that invoices are a top priority. By being organized and able to quickly reference a customer's account when they make contact, you'll be more likely to get paid faster.

Some ways you can project a higher level of organization include:

- Being professional – all written communication with your customers should be consistent, look professional, and clearly show contact details, the amount owed, expectations, and payment terms.

- Having a consistent schedule – sending invoices at the same time of the month and following up after a set number of days.

- Don't show a layered approach – a customer's first invoice will show the amount due and by when, but next month should state that they're late in paying. Don't have 'late Month 1, Month 2, Month 3'. They are all late and should accumulate.

- Flexibility for significant clients – a degree of understanding may be necessary for your critical clients with larger bills to pay that help keep you in business. Phone calls or more personal letters to key staff may be warranted to entice earlier payments.

4. Address problems quickly

Identify and deal with problem payers as soon as you can. The sooner you start chasing the debt, the sooner you'll get paid.

If you've got good accounting software, it'll notify you of any unpaid credit sales as they become overdue. Many accounting programs will automatically flag due bills and generate reports of unpaid bills showing how long they've been late.

You're looking to speed up the collection of late payers. You can do this by:

- Calling them directly – to discuss how a resolution can be made quickly.

- Visit in person – a face-to-face meeting is generally more effective.

- Sending a legal letter – if all other options have been exhausted and you're close to writing off the debt.

So when is a good time to ask for Payment?

• When the contract is signed, ask for a deposit.
• Progress Payments - Every week, perhaps on Monday, you could review the work completed the week before, issue a simple invoice or give your customer a comprehensive payment application and get paid.
• Change Orders - Every change order has a clear scope of work and pre-determined price, which needs to be documented before the work is done and paid in advance. Sounds strong? Well, change orders have a short shelf life; the value of the work and the motivation to pay for the work on all Change Orders rapidly diminish after the work has been performed.
• Final Payment - when the work is done. When you prepare the final invoice, you will credit back the deposit and either issue a small refund check or collect a small check.

Final thoughts

Stop doing the work and yet feel embarrassed about asking for money. Construction business owners often find chasing money owed to them like pulling teeth. It's not pleasant, and it's not the reason you went into business. But when people owe you money, and it's the lifeblood of your business, then you cannot afford not to take action. Clients will respect you for being firm but fair.

About The Author:

Sharie DeHart, QPA, co-founded Business Consulting And Accounting (Fast Easy Accounting) in Lynnwood, Washington. She is the leading expert in managing outsourced construction bookkeeping and accounting services companies and cash management accounting for small construction companies across the USA. She encourages Contractors and Construction Company Owners to stay current on their tax obligations and offers insights on managing the remaining cash flow to operate and grow their construction company sales and profits so they can put more money in the bank. Call 1-800-361-1770 or sharie@fasteasyaccounting.com

This Podcast Is Episode Number 535, And It's About A Guide To Service Based Business Advertising That Works

Marketing covers everything you do in your business that creates awareness, including advertising, brochures, competitions, trade shows, demonstrations, travel, direct mail, email campaigns, your website, and sponsorship. Let's narrow our focus to an integral part of Marketing - Advertising.

Advertising is a massive industry with multiple mediums for your message to be heard or lost in translation. It might sound like a no-brainer, but before you start planning your advertising, you must consider what you are trying to achieve from your investment. Your ultimate objective likely is to build sales, but other things to consider are increasing market presence and building your brand.

Advertising can be used to:

• Establish a reputation as the market leader or industry expert – allowing you to win long-term contracts or even increase prices.
• Build brand awareness for a product to make it easier to sell and raise the profile of your other products.
• Change customer perceptions of your products and services to boost sales.
• Detail a specific, one-off message to your market by informing potential customers of a special offer or product component.
• Address your existing customers to increase your brand awareness – meaning they think of your business first when considering a product or service.

Identifying your target market

Before any advertising is written, you need to take the time to define your target market (if you haven't already). Knowing who you are trying to target will help you customize your marketing efforts to suit those people.

You should already know who is interested in your products or services, but the easiest way to clearly define your target market is to create an ideal customer profile.

How to create a customer profile:

Try and create an ideal demographic for your target market. Think about the age, gender, marital status, and income of the person most likely to buy your product or use your services. If you are unsure, think about your biggest customers – is there anything they have in common, such as age or gender?

Think about the geographical reach of your business – service-based businesses like yours have a limited market area. Think about your regular customers or clients that live within the region. Once you know your market area, you could research existing data or conduct some market research to find out the average age, income, and family status of people in your area.

Be careful not to make your target market too specific, as you may exclude many potential customers. For example, rather than targeting couples aged up to 30 years who own their first home, it might be better to target couples aged up to 40 years who are currently renting but are interested in purchasing a property.

You can learn a lot about your target market by looking at your competition – pay attention to where they advertise, how they present their advertising, and the tone they use in their written material. Subscribing to competitor newsletters or regularly checking their websites is a good way of keeping up-to-date from a distance.

Types of advertising

Knowing what type of advertising will appeal the most to your target market is the key to producing effective advertising.

Here are the most common types of advertising you can use to promote your construction business.

• Print advertising. Print advertising traditionally covers newspapers, magazines, brochures, flyers, and other printed media. Print advertising can be expensive, such as a feature page in a newspaper or a local magazine. More inexpensive options include community papers, classifieds, or delivered printed fliers.
• Internet advertising. Internet advertising includes online services such as YouTube, Facebook, Google, and Twitter but also includes banner ads and embedded video content. Internet advertising offers a range of options for different budgets, from pay-per-click services such as Google AdWords to home page coverage on a popular website.
• Outdoor or out-of-home advertising. Outdoor advertising covers a range of billboards, signs, or even event sponsorship. Other popular types of outdoor advertising include motor vehicles, such as advertisements on buses or cars. Some outdoor advertising, such as billboards, will require a permit, and most signs are subject to local laws and regulations that determine where they can be located.
• Broadcast advertising. Broadcast advertising traditionally includes television and radio but can also cover some Internet mediums such as YouTube, Vimeo, or even podcasts.

Appealing to your market

Now that you have identified your target market, the next step is to decide which forms of advertising will give you the best return on your investment.

This decision will be based on the characteristics of your target market, such as:

• Personality
• Values
• Interests or hobbies
• Lifestyles.

Think about how your service fits your target market's lifestyle – will they have enough time to wait for a renovation project to be done, or are they too busy? Also, consider what features of your product or service will be most appealing to them, such as quality, price, and after-sales support.

You should now have a good idea of which features of your products or services you should pay the most attention to in your advertising material.

Future-proofing your advertising

To get the most out of your investment, make sure you:

• Listen to any customer feedback about your advertising.
• Are prepared to amend your advertising efforts if they aren't working.
• Observe your competitors' advertising efforts and pick up on any new trends or tools you can use.
• Ask another business owner or professional for advice if you doubt advertising material content, design, or tone.
• Are aware of laws or regulations about where you can advertise and the content of your messages.
• Feed your advertising results back into your marketing or business plan.

No-idea vs. Objective and Task Method

I see many construction businesses that are just too busy during certain times of the year to think of advertising, and if they did, it would be a waste as they would not be able to handle the work anyway. Suddenly, however, sales fall (perhaps due to seasonality), and then the business starts marketing. However, this could be a waste of money as you're often marketing at the wrong time or advertising to get instant sales, which is unlikely. So the problem is that the marketing money is spent during slow times (this hurts) and is allocated to fix a problem instead of creating new opportunities.

What to do? At the start of the year, select the targets you'll aim at over the next 12 months. Work out what you want from each of these targets (such as 20 new clients, or each existing customer to spend another $100 in your plumbing business, or an increase in the average sale). Then expressly state what you want to do to achieve this, estimating how much it will cost (common sense will give you guidelines, for example, a small service-based business will not be spending $100,000 on TV advertising).

Final thoughts

"Early to bed, early to rise, know your numbers, and advertise."

Always have a method of monitoring if your advertising is working or not—otherwise, you'll fall into the 'no idea' category that far too many small business owners belong to. You can't refine and improve your marketing spending without measuring the results.

About The Author:

Sharie DeHart, QPA, co-founded Business Consulting And Accounting (Fast Easy Accounting) in Lynnwood, Washington. She is the leading expert in managing outsourced construction bookkeeping and accounting services companies and cash management accounting for small construction companies across the USA. She encourages Contractors and Construction Company Owners to stay current on their tax obligations and offers insights on managing the remaining cash flow to operate and grow their construction company sales and profits so they can put more money in the bank. Call 1-800-361-1770 or sharie@fasteasyaccounting.com

This Podcast Is Episode Number 534, And It's About The Rundown To Running Your Own Construction Business

Getting your construction business up and running and making a profit is usually much more complicated than it sounds. So let's focus on honing the skills you'll need to make it happen by acquiring these yourself or consulting professionals to help you.

What it means to be your own boss

Being your own boss might sound like it is the ultimate ticket to freedom and financial success – and it can be. But don't be fooled into thinking you'll be able to put in a few hours each morning and spend the afternoons networking over a round of golf. The reality is that most businesses require much hard work – more than your standard 9–5 job and over some years – before they start to make a reasonable profit, and many new construction businesses fold before they reach that point.

Here are the top things you should be aware of:

You need to be passionate about what you do: Setting up your contracting business is challenging. If you're not passionate about what you do, you'll find it hard to stay motivated when faced with several hurdles. Also, if your business is just another idea to make money and not something you're passionate about, you'll lack that key ingredient to make your new business more attractive than the established competition. Before you start a construction business, ask yourself if you're passionate about this industry.

You'll need to make sacrifices, at least during the first couple of years: You'll need to put in a lot of hard work between coming up with your business idea and establishing your business. You'll probably have to work harder than most of your mates and make many sacrifices. It might mean less time with your friends, less time for sports or hobbies, or even less time with your family. You'll also probably be taking home less money – and might need to sacrifice family holidays or put major household purchases on hold until your business is established. Ask yourself if you're prepared to make the sacrifices necessary to make it a success – and check that your family is prepared to make these sacrifices too.

You'll face risk and uncertainty: When you start your own business, you won't have the security of regular payments from an employer. Your business might be unable to pay you a wage for the first few weeks, months, or years. In addition, you might need to draw on your savings or even take out a loan to finance your business operations. There's an element of risk and uncertainty when you start your own business, so you need to be sure that your construction business idea is viable and that you have enough money to support yourself and your business until you reach your break-even point and start turning a profit.

You'll need abundant patience and persistence: It's rare for a start-up that has everything run according to plan without any teething problems. You'll likely encounter your fair share of setbacks and challenges, from financial issues to demanding customers and problem staff. While there's a fine line between persisting against all odds (when the business is not viable) and giving up when the going gets tough, you'll need patience and persistence to make your business a success.

Getting the skills you need

Very few people who own businesses start with all the necessary skills. The secret is to quickly inventory your current skills and identify the gaps in your knowledge base. You can then either get the training you need or employ people with the right skills for those areas you don't have a natural affinity for.

You'll need the following skills to run your business.

Market research skills to understand the market you are entering and stay abreast of market developments, customer preferences, and the actions of your competitors.

Money management skills to forecast when you expect your business to break even, understand your financial position at any point, and asses the financial implications of any business decision you make.

Marketing and sales skills to effectively promote your products or services and reach your break-even target sales as soon as possible.

People skills to help you manage and motivate your staff and deal with customers.

Negotiating skills to ensure you can strike the best deal when dealing with suppliers or bidding contracts.

In the longer term, it's a good idea to do courses in all these areas, even those you're uncomfortable with. If, for example, you don't like figures, or feel you are not good with people, try to develop these skills over time. A rudimentary understanding of financial statements and what the critical metrics for your business mean will help you run your business better and improve your people skills if that is your area of weakness.

"Do you have what it takes" Self-test

Here's a quick self-test you can take to see what it takes to start your construction business.

1. Do you have several years of experience in the trade industry you're considering entering? If not, it might be best to wait a few years until you increase your knowledge and contacts.

2. Starting your own business is challenging. Do you thrive on challenges? If not, starting your own business might not be your best option.

3. A wide range of skills to run a business successfully would be best. Are you prepared to undergo training to develop the skills you need or to heed input from specialist advisers in areas, not your specialty?

4. There's no fallback guy when you run your own business. Do you enjoy making and being responsible for your own decisions?

5. You'll need to invest much time into your business start-up. Are you prepared to work long hours without the security of a steady income?

6. You might not be able to pay yourself a wage for a while. Are you prepared to lower your standard of living until your business starts to make a profit, and do you have sufficient savings or an alternative income to live off during the start-up period?

7. Most small businesses fail due to inexperience, poor management, or lack of planning. Are you actively working on overcoming these common problems?

8. Starting your own business has implications for your family, including less income, reduced family time, and taking on additional responsibilities. Does your family understand this and unconditionally support your desire to start a business?

9. Regardless of how excited you might be about starting your own business, there is a chance you might fail. Are you prepared to risk losing the money you invest in your business?

When a business starts, it's natural for you, the owner, to be a jack-of-all-trades. You may not have the capital to hire specialists or access the technology to help you. As your business grows–or as you look to take a minor role in your construction company–you may find the industry has become over-reliant on you, making it challenging to take a step back.

Final thoughts

Have you M.A.P.ped your business yet? Consider this before retreating and delegating:

• Marketing - never sells more than Production can provide; on-time and on-budget
• Accounting - manages the money to maintain operations and produce a reasonable profit
• Production - delivers the project intending to exceed customer expectations

As you know, we are big on Construction Marketing, Accounting, and Production; having a basic operation manual in place for your office, remote, and field employees pays off in the long run.

It won't be easy to run your construction business on your own. Are you prepared to hire staff and delegate responsibilities to them or use the services of a professional? If not, this could reduce the chances of your business being successful.

Call, email, or fill out the form on the right to schedule a free consultation with me - regardless of where you are in you're construction business journey.

About The Author:

Sharie DeHart, QPA, co-founded Business Consulting And Accounting (Fast Easy Accounting) in Lynnwood, Washington. She is the leading expert in managing outsourced construction bookkeeping and accounting services companies and cash management accounting for small construction companies across the USA. She encourages Contractors and Construction Company Owners to stay current on their tax obligations. She offers insights on managing the remaining cash flow to operate and grow their construction company sales and profits so they can put more money in the bank. Call 1-800-361-1770 or sharie@fasteasyaccounting.com

This Podcast Is Episode Number 533, And It's About Finding The Right Construction Talent And Common Onboarding Mistakes As a business owner, you know the right people are crucial to your construction company's success. The best employees can help you achieve your business goals, improve productivity, and drive growth. But finding the people best suited to your team can be daunting, and sometimes it's easy to hire someone who seems okay rather than taking the time to find the best fit.

Here are some steps to find and hire staff that support your business growth, whether in the office or the field.

Step 1: Define the job and necessary qualifications
The first step in finding the right talent is accurately defining the job description and qualifications. Is this a new position you're hiring for? Are there gaps in employee skills that need to be met? Is this a position that requires specific knowledge and experience? Remember that there's a difference between "must-have" qualifications and "nice to have" considerations. When setting out "must have" qualifications, include only those that are necessary to the person successfully performing the role.

Remember also that the job salary should match the role and the qualifications. You can't expect to hire someone with ten years of experience by only offering an entry-level wage.

Step 2: Use multiple recruiting channels

These days, there are many places you can turn to when finding employees, and each attracts different people. Using a variety of channels when searching for employees gives you a higher chance of success.

Post the job description on your company website and multiple social media platforms. Use job boards and recruitment agencies to expand your reach. Contact your personal and professional networks to ask for referrals or recommendations. After all, the people you know also know people. They may be able to recommend someone who's an excellent fit for your construction business.

Step 3: Screen candidates

Once you have a list of candidates, you'll need to screen them. This includes going through resumes/CVs and conducting interviews. Check to make sure they have the qualifications and experience you need.

During the interview, ask open-ended questions to assess the candidate's problem-solving abilities, communication skills, and overall fit. Ask about the results they've obtained in previous jobs and lessons they've learned throughout their experience. It's also important to allow candidates to ask questions about your company and the position you're hiring for.

Step 4: Check references

Before making a job offer, it's essential to check references. Contact former supervisors and colleagues to ask about their work performance and attitude. Double-check that they obtained the results they said they did. This will help you ensure that the candidate has a proven track record of success and is a good fit for your construction company.

Step 5: Make a job offer

After checking references and confirming that the candidate has the skills and qualifications to match your needs, it's time to make the job offer. Be clear about the terms of employment, including salary, benefits, and start date. Give the candidate time to review the offer and ask any additional questions they may have.

Once they accept the offer, you can begin the onboarding process.

Step 6: Provide training and support

Once you've hired someone, it's crucial to provide training and support to help them succeed in their new role. This can include job-specific training and coaching on company culture and values. Regular check-ins and feedback can help new employees feel supported and valued and ensure issues are handled quickly and effectively.

In this regard, while most small businesses spend much time and effort finding the right employees, they often fail to capitalize on their newly hired talent by ceding the onboarding process to HR or neglecting their responsibility entirely. From long waits for workspace, equipment, or training to an overly negative recitation of 'don't do these things or you will be fired,' employers consistently miss the opportunity to inspire new contributors and set aggressive performance standards.

Before you bring on your next new hires and leave them to languish in the lunchroom filling out paperwork with an HR representative, consider the following seven common onboarding mistakes small businesses make.

1. Letting human resources lead

While it's important for newly hired employees to fill out their tax forms and enroll in benefits, this process should not replace new-hire orientation. Rather than waste valuable time on paperwork, send new employees a package of documents, or give them a link to apply online before they start their first day of work. Nothing is more demotivating than spending four hours alone in a room filling out paperwork you could have quickly done at home. On their first day, an employee should be greeted by their direct supervisor, who spends at least a half-hour with them to begin building a relationship.

2. Focusing on negatives

While it's vital to discuss expectations early in the onboarding process, focusing on a list of negatives that could result in termination detracts from why you hired the person in the first place. While it's crucial to address ethics and accountability, newly hired employees must be encouraged to engage in the work they were hired to do rather than focus on the top 10 ways they could get fired.

3. Failing to prepare workspace and equipment

There is no excuse to leave newly hired employees without workspace or equipment. It would be far better to delay an employee's start date rather than leave them in a conference room without a workspace or equipment to do their job.

4. Failing to provide an agenda

All newly hired employees should have a training agenda before their start date. The agenda should list the type of training they should expect to receive, the name of the trainer with a short bio, and an expectation of when they will be finished their training and start work on their own. If there is a competency test before the start of work, this should also be noted in the agenda.

5. Failing to introduce co-workers

Co-workers are an excellent resource for newly hired employees. While companies often focus on introducing their most productive workers and managers, introducing new hires to other recently hired employees who can more easily empathize with their needs is often helpful. If possible, consider hiring new employees in waves rather than individually, as this can often build relationships and lead to a more cohesive team.

6. Failing to provide comprehensive training

Training provides a critical foundation for ongoing success in a construction company. Not only does a well-trained employee perform better, but the employee will also have more confidence when interacting with customers and will be far more likely to succeed. If your organization has a high churn rate within the first six months, poor training is likely the culprit. Untrained new hires often become disillusioned with an organization that lacks structure, training, and follow-up. During the first 90 days of hire, an employee should have enough training to be self-sufficient for at least a week, regardless of their position.

7. Failing to provide knowledge resources

Not all employees learn at the same rate using the same methods. Make sure new hires have access to training material in various formats. This includes training handbooks, training videos, and employee shadowing. Rather than force a particular format, concentrate on the results needed to excel at the position. Make sure to give feedback regularly throughout the process.

New employees' first day on the job should be a day of promise and inspiration, not a window into dysfunction. Since first impressions matter, alert everyone in the organization that a new employee has been hired, and supply a biography. There's nothing more gratifying to new employees than to be enthusiastically greeted by co-workers who have taken the time to find out who they are and how they can contribute.

Final thoughts

Finding the right talent for your business can be challenging, but you can increase your chances of finding the right people to help your business grow. Remember to be clear about job expectations, use multiple recruiting channels, screen candidates thoroughly, conduct in-person interviews, check references, make a job offer, and provide proper onboarding, training, and support.

About The Author:

Sharie DeHart, QPA, co-founded Business Consulting And Accounting (Fast Easy Accounting) in Lynnwood, Washington. She is the leading expert in managing outsourced construction bookkeeping and accounting services companies and cash management accounting for small construction companies across the USA. She encourages Contractors and Construction Company Owners to stay current on their tax obligations and offers insights on managing the remaining cash flow to operate and grow their construction company sales and profits so they can put more money in the bank. Call 1-800-361-1770 or sharie@fasteasyaccounting.com

This Podcast Is Episode Number 532, And It's About Adapting Your Construction Business To A Slower Economy It's hard to go a day without reading something in the news about the state of the economy. Whether it's interest rates rising or the cost of living, there's no getting around the fact that in 2023 there are many doing it more demanding than a few years ago. But while there are some economic challenges for individuals and businesses, it's important not to go too far down the rabbit hole. Remember – economic conditions are forever changing, and history tells us things can change anytime.

If you're concerned about the economy's impact on your business or have already experienced its effects, read on. In this article, we'll explore ways to adapt and improve your construction company during slowdowns, so your business can emerge more substantial when the market bounces back.

Take the time to understand your market conditions The news can often overwhelm us with negativity. While staying informed is crucial, consuming every opinion piece and social media commentary can lead to a negative mindset. Instead, focus on your own business and industry to identify the real challenges you're facing. Research might even uncover some opportunities too.

As a construction business owner, adapting to a slower economy can be challenging. However, there are several steps you can take to keep your business afloat during tough times. One of the most important things you can do is to focus on efficiency. Look for ways to streamline your operations and reduce your expenses without sacrificing the quality of your work. This might mean cutting back on specific services or finding ways to complete projects quickly.

Consider the following:

Have there been changes in your industry or the way customers behave?
Can you identify any new, untapped opportunities?
Are there any emerging trends that you can take advantage of?

Understanding your business' position in the market and identifying opportunities to differentiate from competitors is crucial. It guides your marketing budget allocation and shapes your products/services.

A chance to improve efficiency

If your business is experiencing a slowdown and you have some extra time, it's an excellent opportunity to improve it. Many business owners find prioritizing improvement initiatives over customer or administrative tasks challenging, but now you can focus on executing those long-standing plans. These activities can make your operations more efficient and will be even more beneficial once things pick up again.

Documenting processes

Capturing your business processes is a valuable way to improve efficiency. Documenting procedures and creating visual aids can help onboard new team members faster and safeguard against knowledge loss. Protecting your business from the risk of key personnel leaving is essential.

Automation

Artificial Intelligence and automation are changing everything. Explore how these technologies are used in your trade to streamline tasks like data entry, reporting, and inventory management.

Update old systems

Migrating from one system to another can be complex and time-consuming. Businesses often stick with legacy systems for longer than necessary. But new tools can speed up daily tasks, benefitting long-term business growth. These new tools are good for business long term.

Exploring different revenue streams

Consider exploring additional offerings if there is a decline in demand for your core services or products. By diversifying, you'll better weather economic downturns and ensure a steady revenue stream.

Service-related

Consider your team's existing knowledge. Can you broaden your work to capture more clients? For example, if you're a builder who completes new builds, think about how you can communicate your skills for property maintenance, custom carpentry, outdoor living spaces, or project consulting. Your skills and industry knowledge can be used in various ways – take some time to think about it.

Nurture customer relationships

Focus on your existing loyal clients as a top priority, as their satisfaction is vital to maintaining a successful business. While acquiring new customers is essential, remember that the cost of acquiring them is often higher than retaining the ones you already have. In today's digital age, providing outstanding customer experiences is crucial, as online testimonials and recommendations greatly influence potential customers. Take advantage of quiet periods to add spontaneous value to your loyal customers, whether offering advice, checking in on their satisfaction, or surprising them with something free. Going the extra mile for your customers and thinking beyond transactions will earn you their trust and respect, resulting in positive word-of-mouth and referrals that can significantly impact your long-term success.

Expanding B2B opportunities

Consider if your business, focused on serving end users, could extend its offering to cater to other businesses (for example - Nursing home maintenance, etc). This can provide a consistent revenue stream with less time and management than direct consumer engagements. Assess whether pricing for businesses could be lower than for consumers. Estimate potential revenue against reduced margin. If the numbers align, explore this opportunity while maintaining your core business.

Keep track of your finances and budget

Regularly reviewing your finances is crucial to improving your business's health. During quieter periods, you can implement cost-saving practices that have a lasting impact. For example, consider reviewing your suppliers for cheaper options to save time and money. Conducting a comprehensive expense review can unlock savings without significant disruption.

Understand natural business cycles

Keep calm and avoid making hasty decisions based on short-term events. While ignoring the constant economic commentary can be difficult, it's in your business's best interest to rely on concrete facts and data when making decisions. A long-term business plan is a reference point for guiding your choices.

Finally, staying current on the latest industry trends and technologies is important. This can help you stay ahead of the competition and offer your clients the best possible service. Consider investing in new equipment or software to help you work more efficiently and effectively. And don't be afraid to seek advice from other industry professionals or attend conferences and workshops to stay informed.

Final thoughts

Overall, adapting to a slower economy requires a combination of creativity, flexibility, and hard work. But with the right approach, you can keep your construction business thriving even in challenging times. Let me know if you need help balancing short-term actions with long-term goals. I'm always ready to listen.

About The Author:

Sharie DeHart, QPA, co-founded Business Consulting And Accounting (Fast Easy Accounting) in Lynnwood, Washington. She is the leading expert in managing outsourced construction bookkeeping and accounting services companies and cash management accounting for small construction companies across the USA. She encourages Contractors and Construction Company Owners to stay current on their tax obligations and offers insights on managing the remaining cash flow to operate and grow their construction company sales and profits so they can put more money in the bank. Call 1-800-361-1770 or sharie@fasteasyaccounting.com

This Podcast Is Episode Number 531, And It's About A Guide To Building A Solid Construction Company Marketing Plan

When it comes to the construction industry, employee training and development is crucial for success. Providing employees with the necessary skills and knowledge can make their work more efficient and effective, leading to higher-quality results and increased productivity. From safety training to technical skills development, a variety of areas can be focused on in construction employee training and development programs. Investing in these programs not only benefits employees but also improves the overall success of the construction company.

Don't have an employee? As a construction company owner, it's important to prioritize investing in yourself and your growth. By paying yourself first, you'll be better equipped to make intelligent investments in your construction business and provide valuable training and development opportunities for your soon-to-be employees in the industry. This can lead to a more skilled and efficient workforce, which can ultimately help your business thrive.

Let's say that you have two people working for you, one is your apprentice, and the other is your office administrator; developing employee skills for them and yourself creates a situation where your construction company benefits from a more knowledgeable and capable staff while your whole team gains additional skills or qualifications. This can allow employees to further their careers and possibly increase their earning potential in the long term.

Training and skills development can assist underperforming employees and be used to encourage talented employees, allowing them to grow within the business. This helps both individual employees and your business achieve their full potential.

Some business owners worry that training and development can cause an employee to seek additional responsibility elsewhere. But it's also worth bearing in mind that driven and successful employees will lose interest in their job and leave if it doesn't allow them to develop their skills.

To develop skills as a construction professional, starting with a solid foundation of knowledge and experience in the industry is essential. Here are some steps you can take:

1. Set a training budget

Consider setting aside money for staff training and development in your annual budget as you'd budget for other necessary business expenses. You could claim the training costs as a business expense or negotiate more expensive training as part of a salary package with employees.

2. Draw up a training policy

A training policy doesn't need to be too in-depth, but it should set out any special requirements so your employees know what training you'll consider and what requirements they'll have to meet to benefit from company-sponsored training.

You could require that:

• • Training needs to be job-related for the company to pay for it.
  • Employees pay 50% of the course fee if training is helpful to the company but not necessary for their job.
  • Employees reimburse costs (if completely necessary) if they don't complete or pass the course.

3. Discuss career goals and opportunities.

Discuss short- and long-term career goals during performance reviews or employee conversations. You can decide how to match their goals with any short and long-term opportunities available in your business.

Training in areas that do not further your employee's short- or long-term career goals will not be embraced as enthusiastically, so it makes sense to plan future development to balance business needs and employee goals.

4. Identify employee strengths and weaknesses

One of the best ways to get agreement on the appropriate training is to collaboratively identify the strengths and weaknesses of each employee for any current and future roles they might play.

Start by identifying the skills they'd need for the job. Then ask them to identify the skills they have and list their strengths. Then ask your employee to identify the weaknesses in their skill set. Phrase this carefully and be clear that you're not looking to criticize but to find areas where additional training would help them perform current or future roles better.

5. Agree on training objectives

Use the information you've obtained from exploring career goals and opportunities and examining strengths and weaknesses to identify suitable training options for each employee and collaboratively agree on training objectives.

Write down the objectives, then plan how these will be achieved and the timeframes you expect them to be achieved.

6. Stay current

Ideally, as a construction business owner, you must stay current with industry trends and advancements by attending conferences, workshops, and other professional development opportunities.

Remember, developing your skills as a construction contractor is an ongoing process that requires dedication, hard work, and a commitment to continual learning and improvement. You can build a successful career in this exciting and challenging field with patience and persistence.

7. Monitor progress and request feedback

Monitor progress by reviewing the agreed objectives at least once a year to evaluate progress. This allows you to revise the training objectives and plans where necessary.

Consider scheduling regular meetings to ask staff for feedback. These can be as informal or formal as you like, ranging from a quick conversation to asking staff to complete a questionnaire or conducting a formal presentation on what they have learned.

You'll want the following:

• A quick summary of what was learned (the take-home benefits).
• Feedback on whether the training met the employee's expectations.
• Feedback on whether the training met your business's objectives.

Give your employee adequate notice that you'll be asking for feedback. This helps you to evaluate courses or training service providers to use or avoid in the future.

Cultivating construction company productivity through staff training and development is crucial to ensuring success and growth in the industry. By investing in employee training, companies can improve their workforce's skills, knowledge, and efficiency, leading to higher quality work, faster project completion times, and increased profitability.

Training can take many forms, from on-the-job mentoring to classroom instruction, but the key is to provide employees with the tools and resources they need to excel in their roles. This can include technical training in specific construction techniques, safety and compliance training, or leadership and management training to help employees develop critical soft skills. Moreover, training programs should be tailored to the company's and its employees' unique needs. By identifying areas where employees need improvement, companies can design training programs that address those needs, resulting in a more effective and efficient workforce.

Final thoughts

Investing in staff training is an intelligent strategy for construction companies looking to improve productivity and profitability. Companies can build a skilled, motivated, and productive workforce that can confidently take on even the most complex construction projects by providing employees with the resources they need to succeed.

You can't outwork your competition forever, but you can outlearn them. We offer free construction bookkeeping and accounting consultation; fill out the form on the right, and I'll get back to you shortly. We understand your frustrations, so if you or your in-house bookkeeper is lost and tired of your paperwork system, we also offer Construction Accounting and Bookkeeping Classes.

About The Author:
Sharie DeHart, QPA, co-founded Business Consulting And Accounting in Lynnwood, Washington. She is the leading expert in managing outsourced construction bookkeeping and accounting services companies and cash management accounting for small construction companies across the USA. She encourages Contractors and Construction Company Owners to stay current on their tax obligations and offers insights on managing the remaining cash flow to operate and grow their construction company sales and profits so they can put more money in the bank. Call 1-800-361-1770 or sharie@fasteasyaccounting.com

This Podcast Is Episode Number 530, And It's About How To Manage Your Construction Company Payroll Effectively Payroll is one of those things that starts simply enough. You start your construction business and hire a few employees, and things tick along. It's straightforward enough to keep everything in line at first, but what happens to most companies is… they grow!

This is a great thing, but it also means that payroll becomes more complicated. As such an essential aspect of your business, payroll must run smoothly. Getting paid is, after all, the primary reason that most people come to work. One of the biggest challenges contractors face is keeping track of overtime hours. With so many employees working on different job sites and projects, it isn't easy to calculate their overtime pay accurately. Complying with all federal and state labor laws is another essential aspect of a construction payroll system. This includes appropriately classifying employees as exempt or non-exempt, withholding the correct amount of taxes from their paychecks, and providing accurate wage statements.

Here are some tips for managing payroll effectively:

1. Simplify

Payroll is one of those things that can be overly complex, and the importance of simplifying it can't be overstated. Many small and medium-sized companies have quirks in managing their payroll. This can make it difficult for somebody else to step in or for someone new to be trained.

Keep things as simple as possible wherever you can. One way to do this is by switching to direct deposit. This will drastically reduce the work put into issuing and tracking payments.

2. Schedule

At least once per year, and preferably more, it's essential that your payroll professional take some time to create a payroll calendar. This will allow them to highlight any dates that may cause a lag in your employees' pay.

It will also allow you to plan for any potential shortcomings or other issues arising from holiday closures or oddities in the calendar. Making a payroll mistake is a surefire way to lower employee morale, so it's important to be aware of these dates ahead of time.

Once compiled, distribute the calendar to your managers so that they can communicate the information to their employees. This will keep everyone apprised of any potential delays in getting paid that may come up.

3. Automate

The computer can be your best friend. Finding the right software to help with payroll can automatically take care of simplifying and scheduling, freeing up valuable time for your payroll specialist.

It also eliminates the potential for human error in payroll processing and creates a crystal-clear picture of your finances. Many options are available these days that are easy to learn and straightforward to maintain.

4. Brush up

Payroll rules and regulations can change frequently and for any number of reasons. It's important to stay informed on any changes in your region and proactively plan for them.

A lot of time can go into correcting a payroll error, so know what's happening to avoid this. With more and more employees being hired remotely, it's also important to be aware of any regulations about those geographically located in a different area from your business.

5. Get help

There comes the point for all growing trade businesses where they have to outsource their payroll processing; if this is you, congratulations! It is truly a milestone.

There are many options out there regarding hiring a payroll specialist, and many of them are available online. Choose the one best suited for you and your business needs without leaving your desk. This takes the pressure off you to know all the nitty gritty details about payroll processing. By hiring an outside professional, preferably a construction payroll specialist, you can ensure your employees will be paid correctly and on time.

Payroll Options

While every contractor recognizes the flaws of using ineffective tools, they may still be losing money due to inefficient payroll tools and processes. When contractors ask us which payroll option we recommend the most, we often say Direct Deposit. As usual, the reasons are simple and related to our primary role as "Profit and Growth Specialists for Contractors."

Option 1 - Paper check looks like the least expensive. Calculate payroll, handwrite or print a paycheck, hand it to your employee, and done.

What is the first thing an employee does after getting a paper paycheck? They go to the bank or the check-cashing store and get cash! Nowadays, you can deposit a check using your bank's mobile app, but let's say your employee wants to cash it immediately:

If they are paid for travel time to and from the job site, they will typically cash their paycheck to the job site or take a break as soon as the bank opens. Having this scenario in mind, there are three costs to consider:

#1 Travel Time - See how much ten minutes can cost your company and Multiply By Three! Because it will take ten minutes each way to detour to and from the bank or payday advance company, plus ten minutes inside the building.

• For example, you pay your employee $25.00 per hour, which means every ten minutes of doing personal business on company time costs you $5.94, multiplied by three equals $17.82. If Your Company Earns 10% Net Profit, you need to sell another $178.20 worth of work to compensate for your loss.
• If there is more than one worker in the company vehicle, multiply everything by that number.

#2 Cost Per Mile - To operate the company vehicle, which varies depending on the type of vehicles your company uses. Generally, the numbers range from $1.25 to $1.75 per mile. This considers Fuel + Insurance + Repairs + Maintenance + Registration + License divided by the number of miles driven. In this example, we estimate a three-mile detour at the middle range of $1.50 per mile = $4.50. This is towards the lower-end cost and may not reflect the current prices.

#3 Delays On The Job - In construction, you are dealing with project-based systems, not operations or manufacturing-based operations. Every additional day you have to mobilize and de-mobilize costs you money. For example, if it takes (15) minutes for (4) workers to get set up in the morning and the same amount of time at night, your total costs could be $121.92

The total cost for paper checks is between $15.00 and $50.00 per employee. To get the actual results for your company, some analysis would need to be run, or you would look in your Business Process Management System (BPM) for the answers.

Option 2 - Direct deposit could cost an additional $5.00 per payroll and $0.99 per deposit. Direct deposit drops into your employee's bank account one minute after midnight on the day payroll is due. Having a Professional Bookkeeper prepare the payroll is less with direct deposit because of the time saved in making and printing the paper checks, setting them aside for you to sign them, stuffing them in the envelopes, and taking time to pass them out.

Option 3 - A debit Card is similar to a direct deposit. The difference is that the employee does not need a checking account.

Final thoughts

Everything runs smoothly during your regular pay schedule when timecards arrive on time. When employees do not turn in their timecards on schedule and expect you to have their checks ready, no worries; we have you covered. When Payroll Processing gets too complicated, it's time to outsource it.

Payroll is most effectively managed when it's simple, straightforward, and coordinated. By ensuring that our employees are paid fairly and on time, we can help to create a positive and productive work environment. When it starts getting tough to keep it that way, it's likely a sign that your company has grown and you're ready for more robust support.

About The Author:

Sharie DeHart, QPA, co-founded Business Consulting And Accounting in Lynnwood, Washington. She is the leading expert in managing outsourced construction bookkeeping and accounting services companies and cash management accounting for small construction companies across the USA. She encourages Contractors and Construction Company Owners to stay current on their tax obligations and offers insights on managing the remaining cash flow to operate and grow their construction company sales and profits so they can put more money in the bank. Call 1-800-361-1770 or sharie@fasteasyaccounting.com

This Podcast Is Episode Number 529, And It's About A Guide To Building A Solid Construction Company Marketing Plan

As a contractor, having a solid business plan is essential for growing your company and attracting new clients. If you're serious about getting the best value you can for your marketing budget, you'll need to develop a marketing plan.

One of the first steps is to identify your target audience. Who are your ideal clients? What are their needs and pain points? Once you understand your target audience, you can develop a marketing strategy that speaks directly to them.

Building a solid construction company marketing plan is essential for any business owner looking to grow their company. With the right strategy, you can increase your brand awareness, generate leads, and ultimately boost your revenue.

Some critical elements of a successful contractor marketing plan might include the following:

1. Knowing your customers

Firstly, you need to identify your target market. You probably have an idea of who buys from you, but make sure you:

• Define your target market in detail.
• Write down who your target market is.

To help you focus your promotions more effectively, spend time finding out about your client's preferences and habits. To get the best return on your investment, look at how your message is structured, worded, and designed – and where and when you advertise.

2. Studying your market

Market research is an effective way to help find out about your target market. Ask customers for feedback directly or send them an email.

Ask questions such as:

• Why did you hire us?
• What could we do better?
• What additional services would you like us to offer?

Your clients' responses will highlight what works well and will help you attract more sales. This feedback can also help improve your service and encourage positive word-of-mouth referrals.

Show that you're listening and improving where you can, and you'll gain greater customer loyalty.

3. Identifying your competitors

Find out who your direct competitors are – and gather as much detailed information about them as possible. Try:

• Visiting their websites
• Reviewing their advertising and promotional leaflets.
• Observing their relative strengths and weaknesses.

If you want consumers to differentiate between you and your competitors, develop a new marketing and advertising approach. Your competitors' weaknesses will present opportunities for you to market your points of difference.

4. Determining your competitive advantage

When it comes to the construction industry, there's no shortage of competition. Many companies are vying for the same contracts and trying to build a reputation for quality work. But how can you set yourself apart from the rest? How can you create an advantage that will help you win more bids and secure more business?

Sit down with your staff, advisers, and mentors to brainstorm the best competitive advantage for your business. Your competitive advantage can be anything that sets you apart from your competitors in your target market – such as price, service, or location.

It should be something that:

• Makes you stand out from the crowd
• Exploits a gap in the market that your competitors haven't thought about
• Suits your business and the current market condition
• Is essential to your target customers

Use it in all your marketing after you've worked out your competitive advantage. Ensure that your competitive advantage is evident in any customer communication.

One key factor is innovation. Look for ways to incorporate new materials or processes into your projects to give you an edge over your competitors. Maybe you can find a way to use eco-friendly materials that are more cost-effective in the long run. Or perhaps you can streamline your construction process to save time and money.

Another factor is reputation. Word of mouth is compelling in the construction industry, so ensure you deliver quality work and treat your clients well. Be responsive to their needs and concerns, and go above and beyond to ensure their satisfaction. This will help you build a loyal customer base and attract new business through referrals.

5. Creating a promise

A promise helps clarify the most crucial aspect of your business to your customers. You want the customer to value your promise or guarantee.

For example, if you offer a product or money-back guarantee, you must stand by these assurances. Your customers will find out if you can't stand by your promise, and they'll quickly lose trust in you and your business. You'll also run the risk that they'll warn their friends not to hire your company.

6. Building a reliable brand

You must develop an integrated marketing strategy to ensure that all your promotions, advertisements, and marketing communications convey the same unified message and consistent brand values.

A solid online presence: In today's digital age, website and social media profiles are crucial. Ensure your website is easy to navigate and showcases your services and expertise. Use social media to share project updates, photos, and testimonials from satisfied clients.

Networking: Building relationships with other professionals in your industry can help you generate referrals and connect with potential clients. Attend industry events, join local business organizations, and try to stay in touch with your contacts.

Advertising: Depending on your budget and target audience, you may want to consider paid advertising channels such as Google Ads or Facebook Ads. Be sure to track your results and adjust your strategy as needed.

Content marketing: Creating valuable content such as blog posts, videos, or infographics can help establish you as an expert in your field and attract potential clients to your website.

Also, make sure you maximize the opportunity to cross-market your message. For example:

• Mention your website in your email signature.
• Market your social media presence on your website.
• Use your various social media platforms to cross-market content effectively.

7. Evaluating your marketing and updating your plans

Measure the return on investment on all your marketing efforts and update your marketing plans based on what works and what doesn't – for your business, market conditions, and customers.

Some returns are easy to quantify, like the number of sales or the sales value generated from an advert or promotion. Others are harder to put a value on like the number of followers gained on social media or the number of visitors to your website. Some are more difficult to measure, like customers' perceptions or increased brand awareness.

Marketing experts will be able to advise you on the best ways to measure the hard-to-quantify parts of your marketing plan – and will help you improve your efforts for maximum results.

Final thoughts

Don't underestimate the power of marketing. Ensure your website and social media presence are top-notch, and invest in advertising to get your name out there. Consider partnering with local businesses or organizations to increase your visibility in the community.

Remember, developing and implementing a successful marketing plan takes time and effort. Be patient and focus on your goals; you'll see results over time.

About The Author:

Sharie DeHart, QPA, co-founded Business Consulting And Accounting in Lynnwood, Washington. She is the leading expert in managing outsourced construction bookkeeping and accounting services companies and cash management accounting for small construction companies across the USA. She encourages Contractors and Construction Company Owners to stay current on their tax obligations and offers insights on managing the remaining cash flow to operate and grow their construction company sales and profits so they can put more money in the bank. Call 1-800-361-1770 or sharie@fasteasyaccounting.com

This Podcast Is Episode Number 528, And It's About Construction Accounting Concepts You Can Benefit From Today

As a small business owner, you know that managing your finances is crucial to the success of your business. But with so many accounting principles and practices, it can be challenging to know where to start. That's where we come in! This guide will break down the essential accounting principles that every small construction business owner should know. We'll discuss how these principles can help you keep track of financial transactions, create accurate financial statements, and make informed decisions for your business. So, let's dive in, shall we?

Why Are Accounting Principles Important for Construction Businesses?

Accounting principles are the foundation for any successful business. They provide a uniform framework for recording and reporting financial transactions, ensuring consistency and accuracy in your financial records. By adhering to these principles, you'll be able to:

• Make better financial decisions based on accurate and reliable data
• Monitor your business's performance and identify areas for improvement
• Meet legal and regulatory requirements for financial reporting
• Build trust with investors, lenders, and other stakeholders

All Accounting Uses The Same Accounting Equation Assets = Liabilities + Equity

Regarding construction accounting, several concepts can be highly beneficial to understand. Here are a few you can start taking advantage of today:

Construction Accounting Vs. Regular Accounting

Not everyone knows what construction accounting is, and easy to assume all accounting is the same.

Construction Accounting Is Used - When the entire place of business is packed up and taken to the customer. In essence, you are selling, assembling, delivering, and installing a customized product from a mobile shop on location. Think of it like shooting a movie on location without all the glamor, resources, and money to go with it.

Why is there confusion? From a tax standpoint, most construction projects are all lumped together, and after the Cost of Good Sold, Expenses, and Depreciation, you either made money or didn't. The Tax Accountant rolls the numbers to compute the annual tax return. Therefore, if the information is not needed to be broken down for taxes, then the Tax Accountant is not concerned.

As the Construction Contractor paying the bills, you are constantly concerned about which jobs are "Making Money or Losing Money." "Why does it seem like I am watching the money fly by and zooming out of my checking account? It never seems like there is any money left over!"

Materials

A construction contractor may purchase material and resell it to their customer. Thereby thinking it is a reimbursable expense. (You lose money when doing this).

Remember all invoices to the Customer (Retail, General Contractor, Spec Builder, Developer) are income. Every line item on a customer invoice is ALL INCOME. If the words are on the invoice, then the invoice is either taxable or non-taxable based on other factors. Washington State, for instance, has a clear explanation.

Purchases for the material are Cost of Goods Sold or are expenses if you are short-cutting your accounting. I have seen financial statements backed out because they will reflect reimbursable income as a negative number, thereby showing it as a deduction. (The net effect is double dipping on the expense side) The cause is that the accounting software is not correctly set up.

Cost Of Goods Sold (COGS)

It appears regular bookkeepers over their heads with construction accounting are trying to figure out how to input new QuickBooks transactions by copying previous transactions.

This is not an issue with regular accounting because there is only one or two costs of goods sold accounts (COGS), no direct COGS, no indirect COGS, no Work-In-Progress (WIP), no retention, no job costing allocation to consider, and only one customer "cash sale" in addition to several other variables involved in construction accounting.

For example, a material receipt arrives at the regular bookkeeper's desk from a lumber supplier, and they open the QuickBooks contractor file, look up the supplier to determine how the previous lumber purchase was coded, and proceed to code the new transaction the same way.

The problem is that each transaction is unique and could go into any of a dozen accounts or item codes depending upon whether it is a direct cost, indirect cost, WIP, retention, warranty, overhead, administrative, or other costs, or simply an expense. The cumulative effect of these bookkeeping errors in one month can do enough damage to the financial and job cost reports to bankrupt a contractor eventually.

Another example is if the bookkeeper generates job costing reports that are off by 10%, it could cause the contractor to make radically different decisions based on what they believe about the job costing reports.

If the contractor believes the company is undercharging, they may raise bid prices, lose jobs, eventually run out of cash, and file bankruptcy.

If the contractor believes the company is overcharging, they may lower bid prices, lose money on all jobs, eventually run out of cash, and file bankruptcy.

Many bookkeepers have lost their jobs and are freelancing as Jack-of-All-Trades and Master-of-None bookkeepers, doing whatever work they can find, and I understand that everyone needs to eat. I would prefer they avoid contractors and stick to regular bookkeeping like retail stores.

The net result is that more contractors are going out of business due to inadequate financial and job costing reports just when construction demand is about to grow.

Fix the giant boulders one at a time. Get that one thing working, then move on to the next one. What is the most annoying thing you can quickly fix? We talk about accounting because that is our primary focus.

Start with the basics:

• Open a business checking account.
• Use a dedicated credit card for the business (if using a personal card).
• Create invoices, present them to your customer, collect the money, and get it in the bank (Do you have an easy way for your clients to pay you?).
• Collect the money ASAP because, without cash flow, you are out of business.

No - the company with the most Accounts Receivable or Accounts Payable does not win a prize.

• Accounts Receivable means your customers owe you money.
• Accounts Payable means you owe money to your suppliers.
• Net Profit is the money left over. You want lots of Net Profit!
• You are not a banker! Stop borrowing money using your credit cards, Loans, and Lines of Credit, then finance customers' projects at 0% interest.

Final thoughts

Becoming knowledgeable in accounting principles has the power to transform the way you run your construction business. Understanding and implementing these concepts in your construction accounting practices can improve your financial management and set your business up for long-term success.

Fast Easy Accounting does the bookkeeping, accounting, and payroll and offers business coaching for small, brand-new Construction Contractors, General Contractors, Trade Contractors, and Handymen across the USA, including Alaska and Hawaii. Do the parts only you can do; leave the rest to us. You are never too small for us to help, and we can help to begin with your first day in business. Schedule your free consultation here.

About The Author:

Sharie DeHart, QPA, co-founded Business Consulting And Accounting in Lynnwood, Washington. She is the leading expert in managing outsourced construction bookkeeping and accounting services companies and cash management accounting for small construction companies across the USA. She encourages Contractors and Construction Company Owners to stay current on their tax obligations and offers insights on managing the remaining cash flow to operate and grow their construction company sales and profits so they can put more money in the bank. Call 1-800-361-1770 or sharie@fasteasyaccounting.com

This Podcast Is Episode Number 527, And It's About Leading Causes Of Stress For Contractors And How To Counter Them

Construction business owners face various sources of stress that can negatively impact their well-being and overall business performance. Some leading causes of stress for construction business owners include financial pressures, tight deadlines, workforce management, safety concerns, and regulatory compliance. If not adequately addressed, these factors can lead to burnout, decreased productivity, and even business failure.

Many entrepreneurs believe hard work and determination are all it takes to build and sustain a successful business. But when you consider the pressures of running a company, it seems wise to add effective stress management to the list. Left unchecked, stress can erode your passion and undermine performance – not to mention a severe toll on your health.

Are you wondering how to stop stress from derailing your productivity, profits, and overall well-being? Follow these practical tips for avoiding the main causes of "business burnout."

Cause: So many tasks, so little time

Solution: Without effective strategies for managing time and sharing the load, you'll be forced into a reactive versus proactive position – the perfect storm for chronic stress and impaired decision-making.

Prioritize your tasks.

Make a to-do list and prioritize your tasks based on urgency and importance. This will help you focus on what must be done first and avoid feeling overwhelmed.

Use a project management tool to organize and assign tasks, track progress, and share results with clients.

Don't try to do everything yourself. Delegate tasks to reliable and competent employees or outsource them to a trusted contractor.

Hire an accountant to help you navigate taxes and implement time- and money-saving financial solutions year-round.

Cause: Cash Flow

Solution: All businesses, particularly start-ups, must have enough cash to keep running after covering monthly expenses. Cultivating a consistent cash flow is crucial for managing your finances and stress levels. Here are a few ways to stay cash flow positive.

Follow up promptly on unpaid bills, and consider offering an incentive for early bill payment (such as a slight discount when payment is received within five days of invoicing)

Be wary of slashing prices: if you must mark down a product or service, be sure you can recover your costs elsewhere.

Think "less is more" when purchasing inventory to avoid sinking precious cash into excess stock.

Have a trusted employee monitor your cash flow and inform you once it dips below a certain threshold.

Again, this is where your construction bookkeeper comes in. I recommend reviewing your Five For Five At Five.

Cause: Attracting New Clients

Solution: Starting to panic because you keep missing your sales goals? Auditing your current approach and implementing better growth strategies is critical to alleviating that stress. Here are a few ideas to get started.

Drill down into the behaviors and preferences of your customers, so you can better target your marketing.

Analyze each step in your sales process to see where the holes are and tighten your approach.

Use your audience research to develop a new product or service that fills a unique need for your customers and gives you a leg up on the competition.

Practice self-care. Taking breaks throughout the day is important to clear your mind and recharge. Go for a walk, grab a snack, or do something you enjoy. Take care of yourself physically and mentally. Get enough sleep, exercise regularly, and eat a balanced diet. Consider meditation or other relaxation techniques to reduce stress.

Final thoughts

Starting and growing a business takes tremendous energy. But by leveraging skilled help and improving key management processes, you'll learn to pace yourself – and keep that passion burning for years to come.

Running a construction business is challenging, but taking care of yourself is essential to effectively manage your business without burning out.

About The Author:

Sharie DeHart, QPA, co-founded Business Consulting And Accounting in Lynnwood, Washington. She is the leading expert in managing outsourced construction bookkeeping and accounting services companies and cash management accounting for small construction companies across the USA. She encourages Contractors and Construction Company Owners to stay current on their tax obligations and offers insights on managing the remaining cash flow to operate and grow their construction company sales and profits so they can put more money in the bank. Call 1-800-361-1770 or sharie@fasteasyaccounting.com

This Podcast Is Episode Number 526, And It's About Becoming A Better Construction Company Owner By Developing Courage

Fear is a natural, emotional response to distress. The evolution of humanity was dependent upon feeling and responding to fear. Unfortunately, for some of us, fear is a stumbling block to unlocking our full potential and becoming great leaders.

Fear can have a significant impact on business activities. If a business owner is afraid of taking risks or making decisions based on past negative experiences, it can hinder their success. It's important to remember that fear is often based on False Evidence Appearing Real or F.E.A.R. It's crucial to approach business decisions objectively and not let fear cloud judgment. By recognizing and addressing fear, business owners can make informed decisions that lead to success.

The good news is that courage is like a muscle, and when you exercise courage, it often becomes more robust and more natural. Here are a handful of ways to overcome fear, find courage and become a better construction company owner.

1. Don't lose your sense of direction

If you struggle to lead in your construction business or manage your employees, staying connected to your purpose for making your decisions is essential. If you lose your sense of direction, the people you are leading may begin to question your ability and authority. When giving instructions to someone you are charged with leading, be specific about what needs to be done and why.

2. Visualize all of the possible outcomes

Visualizing a negative outcome may seem counter-intuitive to building courage; however, realizing that the worst that could happen is not fatal in most situations is incredibly beneficial. Conversely, visualizing a positive and prosperous outcome can give you the bravery to make risky choices and stand behind them occasionally.

3. Be willing to do what other leaders won't

If you are surrounded by leaders who continually play it safe but are sensing a need to take the road less traveled and make a bold decision, be willing to do it! The fear of people around you disapproving of your choices can be crippling. But the sense of pride when you carefully calculate your options and make a bold choice that turns out well, will strengthen your sense of courage.

4. Carefully consider the opinions of people around you

You don't need to allow yourself to be persuaded by the opinions of others in any way, but occasionally a new view from someone with less experience can bring new life into your construction business. Don't let your employee's inexperience cause you to overlook the great ideas they may occasionally have. Be willing to do things someone else's way occasionally bravely, and your courage will undoubtedly increase.

5. Be willing to commit to success

Have the inner strength and courage to keep going even when things get tough because you know that everything will work out in the end; if something has not worked out yet, it is not the end.

6. Make the hard decision and say "no"

As uncomfortable as it can be to shut down someone's idea, it is necessary sometimes. Next time someone has an opinion you are completely uncomfortable with, respond by telling them no. Often, no explanation is better than a long explanation when you disagree with a person's idea. As a leader, it is right to go with your gut instinct and override decisions you disagree with. Saying no to bad ideas will increase your courage and even the level of respect your employees have for you.

As you can see, building courage is not a complicated process. Building courage is simply taking small steps in your daily life and being unapologetic about doing what you know is right. If you are willing to commit to taking the above steps as a leader, you will soon become more confident in your decisions! Many leaders struggle to feel courageous regardless of their time leading.

Fear on all sides

Contractors without financial reporting systems they can trust to generate accurate Key Performance Indicators and Reliable Job Cost Reports do not know if they are making or losing money from day to day, which leads to doubt which leads to stress, and they tend to work faster and harder. This frantic behavior raises everyone's stress level, affecting your team, project, and client.

Contractors are superheroes! What is your Contractor Superpower? The power of choice.

• Increase your pricing
• Which projects do you say YES to
• Collect job deposits
• Ask the client for money
• Your working hours
• The area of the country where you want to live

You can choose what is best for you, your loved ones, and your construction company.

It is easy to listen to the news and become depressed, agitated, or think the day's challenges are hopeless to overcome. Mother Teresa (of Calcutta) said it best: We, the willing, led by the unknowing, are doing the impossible for the ungrateful. We have done so much, with so little, for so long; we are now qualified to do anything with nothing.

Final thoughts

The rough and tumble world of construction company ownership is not for the weak or the timid. It is an arena where the price of admission is a lot of blood, sweat, tears, long nights, and lost sleep, with peaks of enthusiasm and depths of despair. It can feel like riding a roller coaster operated by a madman trying to convince you to get off, get out and do something more relaxing, like teaching a pig to sing!

With careful planning and a solid strategy, you can overcome any obstacles that come your way. Don't be afraid to take risks and think outside the box. Remember, the greatest successes often come from taking bold actions. So be brave, stay focused, and keep pushing forward. Your construction business dreams are within reach!

Life is a journey that happens one day at a time, one decision at a time, one choice at a time. Tomorrow is a new day with every potential of being happier if we allow it. We will continue empowering and advocating for contractors and construction business owners like you.

About The Author:

Sharie DeHart, QPA, co-founded Business Consulting And Accounting in Lynnwood, Washington. She is the leading expert in managing outsourced construction bookkeeping and accounting services companies and cash management accounting for small construction companies across the USA. She encourages Contractors and Construction Company Owners to stay current on their tax obligations and offers insights on managing the remaining cash flow to operate and grow their construction company sales and profits so they can put more money in the bank. Call 1-800-361-1770 or sharie@fasteasyaccounting.com

This Podcast Is Episode Number 525, And It's About Building A Competitive Advantage In The Construction Industry

A competitive advantage is something that you offer or have that the competitor does not. There must be compelling reasons for people to do business with you rather than with other construction companies.

The need to identify your point of difference is essential. The more similar your business is to many others, the greater your need to develop competitive advantages.

The key to benefitting from the competition is knowing how to take on competitors so your company earns a profit effectively. Look into your industry and the successful contractors around you not to lose sight of your vision for your construction company but as an inspiration to guide your systems and processes.

Identifying your advantage

A competitive advantage is what you are better at doing than anyone else. The wiser you can be about developing and promoting your competitive advantage, the better placed your business will be to succeed. Think about how you can differentiate yourself:

• Low pricing – you're able to supply the most budget-friendly service.
• Specialization – you service a specific niche market better than anyone else.
• Differentiation – you have the same service as others, but you make it different.

Specialization and differentiation are the most common small business strategies because more significant businesses can usually get bulk deals and compete on price. Being affordable is the most straightforward tactic to implement (reduce all your fees but know your worth), though this is the last thing to consider, as it is often a losing strategy. The chances that you can be the cheapest and survive are not good because you will usually compete against companies with far more financial muscle than you have.

Having the most considerable margins is your ultimate goal. You can position yourself away from the cheap end of the market if you develop other competitive advantages, such as excellent, friendly service, good after-sales service, a more specialized range of products, more knowledgeable staff, and so on.

Here are some ways to get ahead of your competition and grow your construction business:

1. Awesome staff

Your staff will be one of your best (or worst) competitive advantages. The advantage of having friendly, knowledgeable, proactive staff must never be underestimated. The key is ensuring your staff is motivated, trained, and performing well. Do this by:

• Establishing clear performance standards.
• Starting incentive schemes.
• Sending them on training courses.
• Encouraging them to develop their product/service knowledge.
• Holding yearly selling courses.

2. Unique or exclusive products

You have an advantage if you can source products or deliver services that the competition cannot. If you're competing against larger or similar businesses, can you establish a reputation for unique products people can't find anywhere else?

3. A great website

A website that is more attractive or easier to navigate than competitors can be a distinct advantage. Can you create a better, more effortless online scheduling experience? More competitive payment options?

4. Become a star

Your own image can be a competitive advantage. No one else has quite your mix of skills, and you can build a 'character owner' image by having your name on as much material as possible, including:

• A signed mission statement for online and in-person visitors.
• Signing your name at the end of all newsletters and correspondence.
• Offering personal guarantees.
• Becoming prominent in your community.
• Becoming an authority in your field and a spokesperson for the industry.

5. Brush up on your technical knowledge

If you can't compete on price, offer superior knowledge to other businesses around you. Consequently, it would be best to ensure staff are well trained. You could ask your suppliers to provide training.

6. Get to know your suppliers

Being on good terms with your suppliers and their sales representatives is an often-overlooked competitive advantage over other businesses that haven't bothered to develop this closeness. A good relationship will provide the following:

• Better service and support.
• Better supply and faster delivery.
• Better return policy and customer support.
• Early notification of specials or discounts. You might get promotional material, displays, signs, and staff training.

Being linked to a large, well-known supplier is a definite competitive advantage. They might do most of the market research, develop new products, conduct customer analysis, and provide nationwide branding and advertising that enhances your credibility. An independent will find it more challenging to compete with you.

7. Display your other services

To gain an advantage, offer things that the competitors don't, especially if they cost very little. Sometimes this may involve displaying what you already do for customers, but most may have been unaware of it. Don't simply expect customers to be automatically aware of your competitive advantages. You must advertise and promote them.

8. Strategic alliances and joint ventures

One of the best ways to compete against larger businesses is to form alliances and joint ventures with other companies. For example, by banding together with other businesses in your industry, you can often gain better group discounts from suppliers than you would if you ordered on your own.

The ability to form intelligent alliances and joint ventures is an increasingly essential and distinguishing feature in the success of many businesses. Joint venture marketing is another way of sharing advertising costs. You can brainstorm many variations on this theme with your staff.

9. Speed

People want quick service, so the faster you can deliver your product or service, the better. Hold regular staff meetings on how to streamline your business processes and fulfill or exceed client requirements without sacrificing the quality of delivery.

Final thoughts

There's room enough in most industries for competition. While knowing who you're up against is a good idea, ultimately, your clients are your priority. Focus on providing meaningful goods and services to them, addressing their pain points, and improving their lives. Market yourself to make those aspects clear. Show them why you're the ideal company to hire for their project.

Using these strategies can effectively take on the competition and help your construction business be successful. Take it one step further by hiring an expert to help you with the things you are not an expert on - for instance, hiring a Website/Social Media Manager to take care of your online presence, as this is your digital office.

Of course, a financial advisor or a construction accountant who has been where you want to go and can guide you will benefit your construction business. We want to be that person for you. Optimize your time and skills by doing what you love and do best.

About The Author:

Sharie DeHart, QPA, co-founded Business Consulting And Accounting in Lynnwood, Washington. She is the leading expert in managing outsourced construction bookkeeping and accounting services companies and cash management accounting for small construction companies across the USA. She encourages Contractors and Construction Company Owners to stay current on their tax obligations and offers insights on managing the remaining cash flow to operate and grow their construction company sales and profits so they can put more money in the bank. Call 1-800-361-1770 or sharie@fasteasyaccounting.com

This Podcast Is Episode Number 524, And It's About How To Increase Your Construction Business Profit In Three Months Sales and profit are two very different things – as a construction business owner, you can find yourself without the cash to pay bills despite making sales you knew were profitable. You may also be startled to discover that solid cash flows from sales deliver little profit. A cash flow forecast tracks cash flowing in and out of your business. The timing of these flows enables you to identify cash-rich and cash-lean periods. This helps make the right decisions, such as buying assets or preparing for cash shortfalls. Cash flow is essential to the survival of your business – arguably more so than profit in the short term. Profit may be necessary for the longer term, but cash is needed to pay bills and operating costs quickly. For example, if you're a plumber with reasonable cash reserves, you can survive until your business becomes profitable. However, if your business runs out of cash, you'll need to find a solution quickly to avoid going bankrupt.

Profit is the money left in your business after all your expenses have been paid. An income statement (also referred to as a profit and loss report) reveals what profit your construction company made last month or last quarter. Your profit's detailed in two figures, namely:

• Gross profit is what's left from sales after deducting the costs of goods sold or services provided.
• Net profit is left from gross profit after operating expenses (your business overheads) are deducted.

Note that net profit isn't the final 'bottom line' profit until all taxes have been paid.

Gaining more significant profits depends on accomplishing all the little things better – rather than making one huge change. You'll need to focus on every detail to reduce expenses and increase your sales turnover over the next 90 days.

Decreasing your costs

For most small businesses, reducing costs is the easiest way to increase profitability. Reducing direct costs can dramatically increase your sales profit while eliminating unnecessary business overheads.

Challenging your direct costs

Identify the steps you can take to minimize your direct costs, such as:

• Negotiating lower prices with your suppliers.
• Reviewing processes and systems to minimize waste.
• Implementing additional security to reduce the chance of theft.

For example, you may have had one material supplier over the last five years. It might be time to challenge your supplier on their wholesale prices while introducing yourself to others who might do a better deal.

Some of your business costs, such as insurance, power, and the Internet, could be put out to tender.

The value of effective systems

Practical systems help you minimize errors – and save time and money. The time invested in creating designs is usually minimal compared to solving a problem from scratch.

Where appropriate, turn decisions into policies to avoid making the same decision again – or sort out the same issues repetitively.

Learn from mistakes and problem areas, and if systems go wrong, fix them. It's a wise idea to review your procedures periodically to see where improvements can be made. For example, if your software firm decides to place all its information on a central server to ensure staff can access it at any time, hours of productivity can be saved each week.

Stay focused on profitability

Focusing staff awareness on profitability can have a dramatic impact. Even if cash flow is your top priority, it shouldn't be at the expense of profitability. Monitor your actual costs against your budgets and your sales against your forecasts.

Measure staff performance

Monitor and measure staff performance and productivity. Be sure to reward productive staff members by linking pay rates to effectiveness.

It's important to praise and thank the staff when it's been earned. Aim to provide a clear career path so your team can grow, and they don't see their prospects as limited.

Aspire to get constant improvement

A simple planning cycle dramatically enhances your ability to make continuous improvements. Thorough planning also helps you anticipate problems and adapt as your circumstances change. Aim to:

• Set measurable, time-limited targets – to monitor how effectively your plans are implemented.
• Review what you've achieved to learn from your experiences and continuously improve.
• Keep improving your underlying systems and planning process, but be ready to alter your strategy if necessary.

Increasing your turnover

To improve your turnover, look for new markets and distribution channels.

Some ideas to help you increase turnover include: for instance, are you making the best use of the Internet? Can you form a strategic alliance with a complementary business or a joint venture to tackle work you don't have the resources for?

• Actively selling – simply taking orders won't ensure your survival as a business. Aim to gain more sales by being proactive.
• Retaining existing customers – through outstanding service and placing value on lifetime patronage.
• Maximizing the value of your sales – consider moving upmarket and providing a premium product or service. Add features to your offerings if the perceived value to customers is greater than the cost to you.
• Keep your products or services up-to-date – extend your product range or work to ensure it stays ahead of your competition.
• Focus your efforts on your most profitable customers – look after your customers who place large or frequent orders, pay their bills on time, and are low maintenance.

Review your profit margins

To improve overall profitability, review your sales and profit margins periodically. Divide your services or products into four categories, namely:

• High percentage of sales and high-profit margins – nurture these stars.
• High percentage of sales but low-profit margins – consider a price increase and examine how you can cut costs to increase your profit margins.
• Low percentage of sales but high-profit margins – consider a sales push.
• Low percentage of sales and low-profit margins – eliminate these where possible.

Consider any possible effects before making decisions. For example, a low-profit product might be the one that brings other businesses from a significant, highly profitable customer.

It's possible to run out of cash or go bankrupt by taking on too much business too quickly, even though each sale is profitable. This is called overtrading – companies that sell on credit rather than cash terms are more at risk. Remember, use O.P.M. - Other People's Money.

Final thoughts

Familiarize yourself with the reports your accounting software can generate to track long-term trends, identify and mitigate risk, and discover new ways to increase profitability. Talk to your accountant about your construction business's most important reports and metrics and how to utilize them.

You don't have to go through this alone. Don't try to manage your company's finances all by yourself.

Collaborate with a trusted professional, invest in quality IT solutions, and spend some time familiarizing yourself with relevant tools and trends. Whether you improve your profits in three months, implementing these processes will result in better construction business management.

About The Author:

Sharie DeHart, QPA, co-founded Business Consulting And Accounting in Lynnwood, Washington. She is the leading expert in managing outsourced construction bookkeeping and accounting services companies and cash management accounting for small construction companies across the USA. She encourages Contractors and Construction Company Owners to stay current on their tax obligations and offers insights on managing the remaining cash flow to operate and grow their construction company sales and profits so they can put more money in the bank. Call 1-800-361-1770 or sharie@fasteasyaccounting.com

This Podcast Is Episode Number 523, And It's About Ways To Keep Your Construction Company Sustainable

Taking steps to create a good foundation in the early days of your business is essential for a sustainable and profitable future.

It's rare these days that your prospective leads happen to find your construction business and become a client with no work. Your company has to grab people's attention, turn curious visitors into leads and then convert those leads into sales.

Keep in mind: Marketing-Accounting-Production

The first thing I would like to point out is:

1. Don't neglect Marketing

Entrepreneurs like you are incredibly busy, and finding the time to promote your business can be a real challenge. The other challenge for new trade companies is money—but every small business needs to invest in marketing activities to increase sales and keep the cash flow flowing.

It's wise to be wary of costly large-scale marketing strategies when you're just starting. The best use of your time in the early days is getting to know your clients and how they tick so that you can design (or hire an expert to mastermind) highly appealing, cost-effective campaigns.

And don't turn a blind eye to what your competitors are up to. Monitor how they attract new customers and think about how you can improve on what they're doing—or take a completely different approach to promote your business that will help your young brand stand apart.

This means that the more solid leads you have, the greater your chances of making a sale. Solid leads are contacts engaged in your business, fit your client persona, and are at least somewhat motivated to hire your service.

Here are four great ways to get more leads for your business:

1. Target your ideal clients

You might want your business to be relevant to everybody, but the reality is that there is a specific target client who is ideal for your business. Those clients are the ones who are most likely to be attracted to your services and, therefore, the most likely to hire you.

These are the people to aim your marketing at. Knowing who they are and what they like helps you develop the products and services they'll use. It also saves you money on marketing because you can target your ideal clients rather than marketing to everybody and hoping somebody shows interest.

Even more critical, when you understand your ideal clients, you can build connections with them more effectively, generating leads that can turn into sales.

2. Know your unique value proposition

Your unique value proposition is what makes you different from your competition. Every business has something that sets it apart and attracts a specific market.

Your products or services might be of a higher quality. You might have better loyalty programs or more specialized staff. Even the size of your business can be a unique value proposition. Smaller companies can claim more personal, attentive, and efficient service for their clients.

Determine what differentiates your construction business from your competition and use that uniqueness in your marketing.

3. Attend networking events

Yes, in-person marketing takes time and energy, and you can only talk to so many people simultaneously. But hearing an entrepreneur speak passionately about their business can be very persuasive. Networking events are a great way to get face-to-face time with potential leads.

Meeting people at events lets you talk directly to potential clients and hear what issues must be solved.

Just make sure the networking events you attend are relevant to your business and are functions that your ideal clients attend. Otherwise, you'll be wasting that valuable time and energy.

4. Create high-value content

With so many people using the Internet to find companies and make purchasing decisions, you must ensure your business is easily found. That means developing attractive, high-value, informative website content that is compelling and encourages page visitors to submit their contact information.

Make sure you use engaging calls to action. Write blog posts that drive traffic to your website. Develop tip sheets that quickly address some of your clients' issues and get people to sign-up to receive them. Create a newsletter that clients or customers can subscribe to. The people on your newsletter subscription list become leads.

However, ensure your content is timely, engaging, and relevant to your clients and business.

Now that you got Marketing handled let's move to Accounting.

2. Keep your eyes on the numbers

If you're starting, you may be surprised by how quickly those day-to-day expenses add up. It's essential to make sure, right from day one, that you consistently track your spending, file your receipts, and monitor your income and expenses with an easy, reliable accounting system.

Cloud-based accounting software (like Xero) can help you know exactly where your finances stand in real time—with secure access to accurate, up-to-date financial data anywhere, anytime.

In addition to collaborating more efficiently with your bookkeeper and accountant so you can get advice whenever you need it, you'll avoid the stress and hassle come tax time—and be empowered every day to make better, more intelligent business decisions.

Touching base with your business advisor is valuable.

Every successful entrepreneur learns from experience—not to mention failure, which can be the greatest of all teachers.

While it's true that "you don't know what you don't know," you can shrink your learning curve by reaching out to experienced mentors for guidance.

Consider working with a small construction business accountant who can provide personalized advice to help you make it through the first year—and an ongoing objective perspective on your business, industry, and market in the future.

And last, let's talk about Production:

3. Take care of your employees

Your business is nothing without your employees; happy employees are more productive, motivated, and loyal. Smart construction business owners know it's worth spending a little extra money to ensure you have the best employees on your staff and reward them for their hard work.

When you can, spend money on your crew, offer bonuses or gifts for meeting their goals or exceptional service, provide better-than-average benefits plans, give them opportunities for training, or increase their salaries.

Happy employees give more to your business. They reduce the turnover rate, saving you the cost and headache of finding and training new workers. Plus, your clients like seeing consistency in your staff, so they'll appreciate that you keep your workers happy.

Alone? I hear you. The reality is that as a small business owner, you DO NOT HAVE to hire employees. Invest in yourself, and outsource the most mundane low-value tasks that take time away from what you are skilled in. Remember that you are your company's most important employee.

It's been said many times that a business is like a baby—and it can be challenging for entrepreneurs to trust someone enough to hand over any aspect of it. Many construction business owners work to exhaustion because they can't let themselves take a weekend off. They neglect their most important relationships and never get to enjoy their successes because there's always more to do.

Final thoughts

Leads don't just magically appear out of thin air. Developing solid contacts that turn into paying clients takes time and work. By knowing who your ideal clients are, understanding your unique value proposition, putting in some face-to-face time, and developing relevant content, you can quickly increase your solid leads this year.

The most successful entrepreneurs know they can't do it all—nor should they—and build in time for rest so they can be more productive at work. Train someone early on to run the business in your absence so you can take a rejuvenating vacation and enjoy the freedom you likely dreamed of when you first imagined going into the construction business for yourself.

Now, you have a road MAP to sustain your construction company for success, and all you have left is to assemble the tools, equipment, and staff to set up your trucks and vans and go to work!

About The Author:

Sharie DeHart, QPA, co-founded Business Consulting And Accounting in Lynnwood, Washington. She is the leading expert in managing outsourced construction bookkeeping and accounting services companies and cash management accounting for small construction companies across the USA. She encourages Contractors and Construction Company Owners to stay current on their tax obligations and offers insights on managing the remaining cash flow to operate and grow their construction company sales and profits so they can put more money in the bank. Call 1-800-361-1770 or sharie@fasteasyaccounting.com

This Podcast Is Episode Number 522, And It's About Increasing Construction Company Profitability Through Better Practices

If you feel overwhelmed by the sheer volume of technological gadgets, never mind apps and other digital "solutions,"; you're not alone. Technology sprawl and the rabbit hole of more and more information available all the time makes productivity—and healthy downtime—a real challenge for many of us.

Although we may be quicker at completing redundant tasks, more time is wasted managing all our different apps and technologies—and more of us live in a near-constant state of distraction.

An epidemic of distracted workers

Maintaining focus on the job is increasingly difficult in the era of social media, chat apps, games, and the ability to search for anything at any time—whether related to the task at hand or not.

Recent research shows that, on average, office workers switch between tasks roughly every three minutes. Half of those "task switches" were not because the phone rang or someone stopped by with a question—they were self-interruptions.

The same study showed that when an interruption is related to the primary task, it isn't a problem for the worker to maintain focus when the interruption ends. But when people have to "shift their cognitive resources" to a new task, it takes longer to remember where they were, refocus, and regain momentum.

If your team isn't working across the same devices, platforms, and apps, imagine the increased inefficiency as workers spend more time dealing with incompatibility issues. For anyone moving between several decentralized apps during the workday, the cost is mental exhaustion—which can lead to an increased lack of focus and even less productivity.

Tools and tips for increasing efficiency

No matter how much we'd like to improve our productivity, multitasking is a myth; most humans can only perform one task well at a time. It seems there are never enough hours in the day to complete every job on your list.

Often you're faced with prioritizing what you need to do right now – deal with a customer, meet a deadline, attend an event – and the things you know you should do for the ongoing growth of your construction business.

Scheduling time to attend to these business activities regularly is a great way to get on track for tremendous success.

1. If you must use a computer at work

To help minimize the temptation to check Facebook or random search, focus on your to-do list and block all digital distractions, like placing your smartphone next to you, so you can focus on just what's in front of you.

Another tip is to batch email rather than reading and responding to messages continually. Sending emails twice a day—once in the morning and again in the afternoon—will train people not to expect to hear from you instantly, creating more reasonable (and sane) expectations. No one can or should be available to work around the clock for our own personal and collective well-being.

2. Know your numbers

It's not uncommon for business owners to lose touch with how well their business is performing daily. But an awareness of your real-time income and expenses is the key to making better decisions that will nurture growth.

Implement these changes and see the difference they make in your business:

• Switch to an online accounting solution offering access to real-time data anywhere.

• Monitor your finances daily, weekly, monthly, and quarterly; review the data with your accountant often.
• Check-in on your other numbers – your website metrics and software analytics – to know whether your marketing, lead generation and sales tactics are working.

3. Update your business plan

Construction companies should update their business plan at least once a year—sooner if an upcoming change requires planning, financing, or re-assigning resources (for instance, a service launch or a new side business).

Many trade business owners neglect to revise their plans regularly. They end up operating on autopilot, losing sight of their bigger goals and the steps they planned to take their business to the next level.

Set goals, mark milestones, and start implementing your plans. Look at your previous year's books to plan with your latest annual figures in mind.

4. Hire help

It sounds simple, but many entrepreneurs' self-sufficient, independent nature can make it difficult to get comfortable delegating responsibility. Finding the right people to relieve the burden of doing everything all the time is the only way a business can scale and reach its potential.

Think carefully about how you spend your days. Are you still at the point where you want to – or need to – do it all? The ultimate success of any company is to reach the point where it can run without you, so you can enjoy a holiday, pass the business on to a family member, or sell it.

Finding the right people you can trust to perform their jobs well and continue to grow your business can take time. A recruitment agency can help you craft an attractive job description and recruit so you can focus on strategies that can bring you greater enjoyment and success.

5. Unplug

Perhaps most importantly, unplug and rest your mind each day. A week or two of time off, away from work, email, and other stress-inducing distractions, will do more to increase your productivity than any app. And be good to yourself by taking a health break each year.

Bottomline

Remember, you can do anything, but not everything. Developing new business habits takes time and commitment – but the payoff is well worth it! Monitor how creating and implementing these practices in your construction business improves company performance.

About The Author:

Sharie DeHart, QPA, co-founded Business Consulting And Accounting in Lynnwood, Washington. She is the leading expert in managing outsourced construction bookkeeping and accounting services companies and cash management accounting for small construction companies across the USA. She encourages Contractors and Construction Company Owners to stay current on their tax obligations and offers insights on managing the remaining cash flow to operate and grow their construction company sales and profits so they can put more money in the bank. Call 1-800-361-1770 or sharie@fasteasyaccounting.com

This Podcast Is Episode Number 521, And It's About Unlocking The Secrets Of Small Construction Business Cash Flow

Cash is king! Construction Company cash flow is the movement of money in and out of your Construction Company; these movements are known in accounting circles as inflow and outflow. Inflows for your Construction Company primarily come from selling goods or services to your customers, but keep in mind that inflow only occurs when you make a cash sale or collect on receivables. Other examples of cash inflows are borrowed funds, income derived from sales of assets, and investment income from interest.

Outflows for your Construction Company are generally the result of paying labor, material, other direct and indirect costs of goods sold, and overhead expenses.

Is Cash Flow Same As Profit?

While they might seem similar, profit and cash flow are two entirely different concepts, each with completely different results. Profit helps calculate your taxes and report to the IRS. The idea of profit is somewhat broad and only looks at income and expenses over a certain period, say a fiscal quarter.

Cash flow, on the other hand, is a more dynamic tool focusing on the day-to-day operations of a Construction Company owner. It is concerned with money movement in and out of a Construction Company. However, more important, it is concerned with the times when the direction of the money occurs.

In theory, even profitable Construction Companies can go bankrupt. It would take a lot of negligence and total disregard for cash flow, but it is possible. Consider how profit and cash flow relate to your Construction Company.

Example: If your retail Construction Company bought a $1,000 item and turned around to sell it for $2,000, then you have made a $1,000 profit. However, what if the item's buyer is slow to pay their bill, and six months pass before you collect on the account? Your Construction Company may show a profit, but what about the bills it has to pay during those six months? You may not have the cash to pay the bills despite the profits you earned on the sale. Furthermore, this cash flow gap may cause you to miss other profit opportunities, damage your credit rating, and force you to take out loans and create debt. If this mistake is repeated enough times, you may go bankrupt.

Maintaining a healthy cash flow is essential for a small business's sustainability and growth. Your construction business can be incredibly profitable but fail because of improper cash flow management.

To prevent that from happening, here are some best practices that can help you better manage your cash flow and maintain the financial health of your small business. Remember, being proactive and vigilant about your finances is the key to success.

Let's dive in!

1. Understand Your Cash Flow Cycle

Before managing your cash flow, you must understand your cash flow cycle. This involves tracking when money comes into your business and when it goes out. You can identify patterns and potential issues by examining the timing and sources of your cash inflows and outflows. For example, you'll notice periods with higher expenses and lower profits or the reverse.

This information helps you make informed decisions on maintaining a positive cash flow. For example, you might offer more sales during your slow periods or find ways to cut costs.

2. Develop Accurate Financial Forecasts

Financial forecasting is crucial to cash flow management, allowing you to anticipate your cash flow cycles. Regularly create and update cash flow projections, considering expected sales, expenses, and other relevant factors. Accurate economic forecasts will help you identify potential cash shortages or surpluses and effectively make informed resource allocation decisions.

For example, you might hold off buying new equipment this month because the next two months are expected to be slower financially, then make the purchases when you have more cash coming in.

3. Monitor Your Cash Flow Regularly

Just like a doctor checks a patient's vital signs, you should monitor your cash flow regularly to maintain your business's financial health. This means periodically reviewing your cash flow statements, balance sheets, and income statements. Doing this lets you spot issues early on, such as late payments or unexpected expenses, and take corrective action before they become significant problems.

4. Maintain an Emergency Fund

Unexpected expenses are a fact of life for any business. To mitigate their impact on your cash flow, establish an emergency fund. This reserve can cover unexpected costs or tide you over during periods of slow cash inflow.

Ideally, your emergency fund should be able to cover at least three months' worth of operating expenses. Not only will this help your finances, but it will also give you peace of mind because you know you'll have breathing room in an emergency.

5. Invoice Promptly and Efficiently

Although invoicing is vital to your cash flow, many small business owners put off invoicing and following up on unpaid invoices.

You must invoice your clients promptly and efficiently to maintain your cash flow. This means using accurate invoicing software, setting clear payment terms, and providing convenient payment options for your customers. If you have clients with accounts payable processes, ensure you understand the process and their payment cycles so you don't wind up waiting months for payment.

Additionally, follow up on overdue invoices promptly. The sooner you invoice and follow up, the sooner you'll get paid.

6. Encourage Early Payments

Offer incentives for customers to pay early, such as discounts or other perks. This can help increase cash coming in and provide a buffer for cash flow management. Additionally, consider implementing payment milestones for large projects, where customers pay a portion of the invoice at specific intervals throughout the project.

7. Keep Your Expenses in Check

To maintain a positive cash flow, it's essential to keep your expenses under control. Regularly review your expenses, identify areas where you can cut costs, and negotiate better terms with suppliers. Remember also to check your ongoing subscriptions and automatic payments. You may be paying a lot for products you don't use.

8. Use Technology

Embrace technology to streamline your cash flow management. By leveraging technology, you can save time and effort, allowing you to focus on growing your business. There are many tools available that can help you track expenses, create financial forecasts, and automate invoicing. Chat with us to get our recommendations for your business.

9. Seek Professional Guidance

Financial professionals provide valuable guidance and insights on managing your cash flow. They will identify potential issues and develop strategies to maintain a healthy cash flow.

Working with a construction accounting specialist can help you avoid costly mistakes and make well-informed financial decisions, which is well worth it in the long run.

The bottom line

Effectively managing your cash flow is crucial for the success and growth of your small construction business. By understanding your cash flow cycle, developing accurate financial forecasts, monitoring your cash flow regularly, and implementing the better practices discussed in this blog post, you can maintain a healthy financial position and pave the way for sustainable growth.

Monitoring and managing your cash flow is essential for the vitality of your Construction Company. The first signs of financial woe appear in your cash flow statement, giving you time to recognize a forthcoming problem and plan a strategy to deal with it. Furthermore, with periodic cash flow analysis, you can head off those unpleasant financial glitches by recognizing which aspects of your Construction Company can potentially cause cash flow gaps.

Need assistance? We can help you analyze and manage your cash flow more effectively and ensure your Construction Company has adequate funds to cover day-to-day expenses.

About The Author:

Sharie DeHart, QPA, co-founded Business Consulting And Accounting in Lynnwood, Washington. She is the leading expert in managing outsourced construction bookkeeping and accounting services companies and cash management accounting for small construction companies across the USA. She encourages Contractors and Construction Company Owners to stay current on their tax obligations. She offers insights on managing the remaining cash flow to operate and grow their construction company sales and profits so they can put more money in the bank. Call 1-800-361-1770 or sharie@fasteasyaccounting.com

This Podcast Is Episode Number 520, And It's About The Problem With High-Profit Jobs In The Construction Industry

Many problems can be traced back to the "Halo Effect," which happens when a contractor thinks, "We are so good at (fill in the blank) we should expand into (fill in the blank)."

The most common situation is when a residential remodel contractor with a reputation and a substantial company generating 15% or more profits decides to start building custom homes. Or the opposite, a home builder who decides to branch out into residential remodeling.

Residential Remodel Contractor Building A Home

The processes, tools, equipment, materials, skills, and invoicing procedures required to build a house from the ground up differ entirely from modifying a home with people living there.

The remodeling contractor uses a form of "Cost Plus" or "Not To Exceed" to provide the homeowner with the scope of work and a contract price the bank needs to finance the construction. That process can work for a residential remodel because the house is already in place, which helps define the size and scope of the project.

The size and scope of the homeowner's dream house are limited only by what the building codes will allow. When the labor, material, other costs, and subcontractor bills pile up, the remodeling contractor asks for a construction draw and is told the bank needs a Pay Application filled out and submitted. Then it will take a while for the bank inspector to review the project and approve the draw.

This is when the remodeling contractor figures out they are providing all the labor, material, other costs, and subcontractor expense up front and getting paid only when and if the building inspectors, architect, bank, and the client agree to the draw request.

Home Builder Doing A Residential Remodel

The processes, tools, equipment, materials, skills, and invoicing procedures required to modify a home with people living in it differ entirely from building a house from the ground up.

New construction workers are more like cave dwellers with a brute-force mentality. If something doesn't fit or will not work the way they want, they use more brute force until it does. Every problem has one answer "Brute Force."

The same goes for managing sub-contractors and suppliers. The home builder bids on a residential remodel project using the exact square foot costs they have continuously operated in building houses and quickly discovers the meaning of "Hidden Costs."

These costs include dry rot, cracked foundations, broken plumbing, bad wiring, worn-out HVAC, and other unpleasant surprises.

Homeowners living in the house while the remodel is happening do not ever want to be without water, lights, heat, and privacy, and they don't know how much debris, dust, and noise is involved in a remodel.

Homeowners want to believe everything is included in the original contract price, including the little extras they think of along the way. When it comes to change orders, that is something most home builders do not understand. They don't have a process for tracking them, let alone pricing and getting paid for doing them.

Most trade contractors and subcontractors working on residential remodel projects understand change orders and how to pressure the builder to get paid. Too often, this is the main reason home builders go bankrupt - cash flow issues.

The Solution

Most construction business owners who use accounting software quickly master the basics. They automate processes like invoicing and payroll, track expenses, and view real-time financial reports to manage cash flow and make better business decisions.

The problem is that high-profit jobs have a way of turning into low or no-profit jobs, and in some cases, they can bankrupt your construction company because you bid on the project using whatever model you are accustomed to using, and in the end, you wind up with cash flow problems.

But what many business owners don't take advantage of are key insights that can improve customer care and increase sales. With the help of your accounting software, you can continue to provide services that you're good at, work on improving them, and help boost your bottom line.

• Gain insights that increase sales

If you're not tapping into your accounting software analytics to better understand your clients, you're missing a significant opportunity to close more sales.

Most accounting software can highlight your biggest spenders and buying trends. Knowing who your best clients are, your most extensive selling products and services, and how much each customer spends impact your marketing decisions – not to mention - help you fine-tune your sales strategies.

• Improve customer care and boost profits

Accounting software can offer peace of mind when you know your financials are accurate and up to date. But another significant advantage of an online accounting solution is how much time you'll save by automating processes like invoicing and payroll – giving you more time to follow up with clients and seek out new prospects.

We all know how important the personal touch is in sales. So why not use your accounting software client data to help remember your customers' birthdays or thank them when they've hit a milestone – being on your subscription service for five years, for example?

With enhanced customer data at your fingertips, your construction business will earn a reputation for personalized service. You'll be able to respond quickly when a client calls with a question about a service. And you'll be able to suggest substitutions and offer valuable add-ons based on their buying preferences, so upselling becomes a snap.

How will you use accounting software to grow your small contracting business?

Savvy construction business owners take the first step toward better profitability when they stop thinking of accounting software as a financial management solution and consider it a comprehensive tool for business growth.

You may be surprised at how accounting software can help you better serve your customers or improve your sales strategies when you look at its true potential.

Final Thoughts

For your construction company to survive and thrive in any economy, you must pick a niche market and develop your Strategic Business Process Management System (BPM) with written goals of what you want to accomplish and how much money you want to earn.

Once you have picked your construction specialty, stick with it no matter what, and in the end, you will have the best chance of making much money and retiring wealthy. All contractors who try to do the right thing deserve to be rich because they bring value to other people's lives.

About The Author:

Sharie DeHart, QPA, co-founded Business Consulting And Accounting in Lynnwood, Washington. She is the leading expert in managing outsourced construction bookkeeping and accounting services companies and cash management accounting for small construction companies across the USA. She encourages Contractors and Construction Company Owners to stay current on their tax obligations and offers insights on managing the remaining cash flow to operate and grow their construction company sales and profits so they can put more money in the bank. Call 1-800-361-1770 or sharie@fasteasyaccounting.com

This Podcast Is Episode Number 519, And It's About Using Financial Reconciliation To Keep Your Construction Business On Track

As a small business owner, you're likely already aware of the importance of keeping your finances in order. Financial management goes deeper than paying your bills on time and collecting invoices (although those are also important). It involves regularly checking your financial situation to ensure your accounts are in order, your records are up-to-date, and you're spending within your budget.

Among those activities, financial reconciliation is vital in keeping your finances and business on track. Force reconciliations can cause your net income to be over or understated, which means you pay too much in taxes now or too little now and the rest later with penalties and interest because the IRS can ask for a copy of your bookkeeping record.

Here's what you should know about financial reconciliation and how it can help your construction business.

What is financial reconciliation?

Financial reconciliation is a process of ensuring your financial records are consistent and accurate. When you conduct a financial reconciliation, you review financial statements and compare them with your bank statements, credit card statements, vendor statements, and other relevant financial records, such as invoices.

As you do this, you'll look for errors or discrepancies–for example, if a payment appears on your bank statement but not your accounting records or the costs are for different amounts on different records. When you conduct a financial reconciliation, you want to ensure that the money in your bank account matches the money your financial documents show you should have.

Discrepancies need to be addressed, or you'll wind up with financial information that isn't accurate, which affects your cash flow and your ability to make financial decisions. If the discrepancy involves an ongoing payment to you or a vendor, catching it early could save you much money.

Financial reconciliation ensures that all financial transactions are recorded accurately and thoroughly in your accounting system. That way, you know exactly how much money you have and how much is moving into and out of your business, and you can make informed financial decisions.

Types of financial reconciliation

Every business has different reconciliation needs, depending on how big, how many, and what types of transactions it has.

Bank reconciliation involves your business's bank statement to your accounting records to ensure that all transactions have been recorded correctly. You're looking to safeguard your bank statement's bottom line matches your bank account balance. If not, you'll want to determine why. Is there an automatic withdrawal not yet posted to your account? If so, you need to be aware of it to prevent yourself from overdrawing on your account.

Credit card reconciliation involves reconciling your business's credit card statements with your accounting records to ensure that all charges have been recorded accurately. This is similar to a bank reconciliation in that you need to know exactly how much you've spent on your credit card–including pending transactions–to understand how much you have available.

You can also conduct vendor statement reconciliation, examining your vendor statements against your accounting records to ensure all invoices have been paid and recorded accurately. This can prevent any errors in paying your vendors.

You'll need to conduct intercompany reconciliation if you have two units of business or more–such as divisions, subsidiaries, or franchises. This is where you compare financial records between two or more companies to ensure transactions are recorded accurately and consistently.

Why you need financial reconciliation

Financial reconciliation is a vital tool that helps you manage your business more effectively. It ensures your financial records are accurate, complete, and up-to-date. This prevents errors or discrepancies that could lead to financial losses or legal or compliance issues.

It can also help identify any fraudulent activity or transactions you disapprove of, protecting you against fraud and lessening the risk of financial losses. If you have numerous transactions that are difficult to track, regular financial reconciliation prevents accidental overspending or missed payments that could ultimately affect your relationships with vendors.

As mentioned above, many businesses must comply with financial regulations and reporting requirements. Financial reconciliation helps ensure that your business complies with these requirements. If you're not compliant, you can take measures to address the issue quickly before it gets out of control.

How to conduct financial reconciliation

If you're looking to establish a solid, repeatable process, these are a few steps you can take:

Step 1: Identity what types of financial reconciliation you need to perform.

Step 2: Establish roles and responsibilities for each team member involved. Make sure everyone knows and understands what they are responsible for and when.

Step 3: Create a schedule for conducting financial reconciliation regularly. This may vary depending on the size of your business, and you may perform different types of reconciliation on various programs depending on your unique business needs.

Step 4: Ensure all financial data is easily accessible to those who need it. Each time you conduct a financial reconciliation, ensure you have all the necessary documentation and data. Cloud accounting software can help you manage your reconciliation.

Step 5: Conduct the reconciliation: Compare your financial statements to your accounting records to identify discrepancies or errors.

Step 6: Investigate and resolve discrepancies: If you find errors or inconsistencies, look into them and do what you can to fix them. You may have to hunt down additional paperwork, contact vendors to discuss payments, or contact your bank or credit card issuer.

Final thoughts

As a construction business owner, you must make vital decisions to move your company forward. Accurate financial records enable you to make those decisions based on your cash flow and current financial standing.

Bank and credit card accounts are the hubs of all your construction accounting and bookkeeping, meaning all transactions must be coded and input properly to have meaningful, reliable reports.

If you have questions about financial reconciliation or other important financial aspects of your business, don't hesitate to contact us. We're always happy to answer questions and show you how we can simplify business management.

About The Author:

Sharie DeHart, QPA, is the co-founder of Business Consulting And Accounting in Lynnwood, Washington. She is the leading expert in managing outsourced construction bookkeeping and accounting services companies and cash management accounting for small construction companies across the USA. She encourages Contractors and Construction Company Owners to stay current on their tax obligations and offers insights on managing the remaining cash flow to operate and grow their construction company sales and profits so they can put more money in the bank. Call 1-800-361-1770 or sharie@fasteasyaccounting.com

This Podcast Is Episode Number 518, And It's About How To Protect Your Construction Company From Bankruptcy

Starting a construction business is not for the faint of heart. A certain level of stress comes with ensuring your company's success. If things go wrong, it all falls back on you. That said, the freedom and sense of accomplishment of running your own business make the challenges well worth it.

With good planning and strong business practices, you can avoid the pitfalls and drive your trade business to financial success. Learn the top reasons why small businesses end up in bankruptcy and what you can do to prevent that from happening to you.
1. Poor cash flow

Not bringing enough money in is the main reason why businesses fail. You must have more money coming in than is going out, or you're on the express train to bankruptcy. This might mean increasing your prices, decreasing costs, or combining the two. There might also be different service models you can offer (such as subscription services) or ways to branch out your income.

Work with an accountant or bookkeeper to help you identify issues with your cash flow as soon as you know there's a problem–or to prevent one before it happens. The earlier you catch a cash flow problem, the better.

2. Insufficient initial funding

Don't rely solely on credit to fund your business. If you start in a deficit, climbing out of debt and becoming cash positive will be much harder. It can also be challenging to break the habit of throwing capital investments on credit in an attempt to start making money.

Explore all of your options for initial funding. Ensure you have enough budget to start your business on the right foot.

3. Difficult market conditions

Economic recessions or depressions can negatively affect businesses, especially those relying heavily on consumer spending. Unfortunately, there's not much anyone can do about a poor economic climate but try to budget for the ebbs and flows of the market so you have breathing room if times get tough.

An emergency account with money set aside for unexpected situations will at least give you some cash to survive on if things take a downturn.

4. Poor financial management

Finances can get complicated, so you must ensure you're on top. Failing to keep accurate financial records, not managing expenses effectively, and not correctly forecasting future revenues and costs are all issues that could hurt you financially.

Work with an accountant, bookkeeper, or advisor if you have difficulty managing your finances. They can help you set a plan and show you how to ensure your money is best used.

5. Lack of market research

If you can't compete with your rivals, your construction business may struggle to generate enough revenue to stay afloat. This problem typically comes back to a lack of market research.

Entrepreneur jumps into a market they're passionate about, only to discover that somebody else is already offering the same thing – and they've already got the market cornered. Or maybe there's no need for that particular product or service.

Market research before entering the business and offering a new product or service. The results will tell you whether there's a need for what you're offering.

6. Legal issues

Lawsuits, fines, and penalties can be costly for businesses, draining their financial resources. The best way to avoid this is to ensure you're familiar with the rules and regulations you must follow or get help from a professional advisor when necessary. An ounce of prevention is worth a pound of cure.

Construction Company Failure is Always Preceded by Bad Bookkeeping

The construction company owner who buys QuickBooks and hires a regular bookkeeper to "put stuff into QuickBooks" and then ignores all of the financial and job costing reports generated from their QuickBooks file drives their construction company into economic doom.

Too often, contractors have led down the primrose path into bankruptcy and business failure by relying on inaccurate, false, misleading financial and job costing reports from their QuickBooks file.

Part of the blame rests on Intuit, the maker of QuickBooks because their marketing strategy implies that anyone, regardless of their understanding of accounting principles, can use QuickBooks, and if you are a contractor, all you need is QuickBooks for Contractors. It sets up contractors for failure by playing to their self-image of strong people who are rough and tumble and can do anything. In too many cases, these contractors end up feeling inadequate and experience huge disappointments feeling like they are the only people on earth who cannot figure out how to use QuickBooks.

Most of these contractors give up trying to make QuickBooks do what they want and lower their expectations to just knowing how much money is in the checkbook, Key Performance Indicator #1, and ignoring the other four Key Performance Indicators. Ultimately, it is like driving a car in the pitch-black darkness, on the freeway, with a tiny flashlight at 60 MPH, and being shocked and dismayed when it crashes, rolls in the ditch, and burns.

How to avoid bankruptcy

While the reasons construction businesses end up going bankrupt may seem numerous, there are some specific things you can do to make sure it doesn't happen to you, such as:

• Maintain accurate financial records and regularly review your business's performance.
• Develop a solid business plan that includes realistic revenue and expense projections.
• Diversify your business's revenue streams to reduce reliance on a single source of income.
• Stay current on industry trends and market changes.
• Reduce unnecessary expenses and manage costs effectively.
• Seek professional advice from construction accountants, lawyers, and business consultants when necessary.
• Build up an emergency fund to help your business weather tough times.

Avoid taking on too much debt and manage what you already have effectively.

By taking these steps, you can reduce the risk of bankruptcy and increase the chances of long-term success.

Final thoughts

A business might end up in bankruptcy for many reasons, but a bit of planning goes a long way. Do your research, be honest when you need help, and work with a financial professional to help you stay profitable. Contact us to discuss further how you can protect your construction business and learn how we can help.

No construction company goes bankrupt that had useful, accurate Financial Statements and Job Costing Reports that they understood and paid attention to because they would have seen bankruptcy coming well enough ahead of time to avoid it.

About The Author:

Sharie DeHart, QPA, co-founded Business Consulting And Accounting in Lynnwood, Washington. She is the leading expert in managing outsourced construction bookkeeping and accounting services companies and cash management accounting for small construction companies across the USA. She encourages Contractors and Construction Company Owners to stay current on their tax obligations and offers insights on managing the remaining cash flow to operate and grow their construction company sales and profits so they can put more money in the bank. Call 1-800-361-1770 or sharie@fasteasyaccounting.com

This Podcast Is Episode Number 517, And It's About How To Weigh ROI Vs Cost When Making A Business Purchase Deciding to purchase something to help your construction business is a big decision. It can be challenging to part with hard-earned money, especially in the early days. To understand the right time to invest by purchasing something for your business, you must calculate whether the Return on Investment (ROI) would be profitable.

The cost is the money you spend making the purchase plus any indirect costs (such as training costs) related to the purchase. The ROI is a calculation of financial gains or benefits that you obtain due to that cost.
To determine ROI profitability, there is a simple formula you can use. If the purchase yields a positive return, it can be considered profitable. However, if the purchase does not earn back the money it costs, it would be considered a negative return on investment.

Return on Investment Formula

Using a formula to calculate the ROI only offers a rough initial estimate. Other factors might come into play, such as future work you will get because of the new asset or unforeseen expenses. The formula to determine ROI is:

ROI = (Net Profit / Cost of Investment) x 100

Let’s see an example:

Suppose you run a spec home building company. Three employees spend their time in the field gathering data and taking stock of how a proposed development project would affect the landscape. Vegetation, waterways, animals – everything is taken into consideration.

You have one client who would like you to survey very rugged terrain. They would pay $2500 if you could complete this work, but covering the landscape would be difficult and take time.

The only way to do it effectively would be to purchase a drone for $1000. It would cost $200 to train each employee how to use the drone. The new equipment would make taking on this work possible and save many hours spent physically in the field.

Additionally, having a drone would mean you could offer your new aerial surveying services to other clients who are undertaking more large-scale or complex projects.

Calculating the ROI of obtaining new equipment for this project:

First, you would tally your total expenses and expected revenue to decide whether this purchase would be profitable.

Expected Revenue = $2500

Total Expenses = $1000 + ($200 x 3) = $1600

Then, you would subtract the expenses from your expected revenue to determine the net profit.

Net Profit = $2500 – $1600 = $900

To calculate the expected return on investment, you would divide the net profit by the cost of the investment and multiply that number by 100.

ROI = ($900 / $1600) x 100 = 56.25%

Your return on investment would be 56.25%, a positive return. Not only that, but your new equipment may allow you to gain more work in the future, making your ROI even better.

What happens when you don’t put your investment to work

What if you purchase the drone but find the learning curve overwhelming, and it collects dust in a corner?

In this case, your client may not hire you, or the hours required to do the work on foot may make taking on the project cost prohibitive. Your ROI would be zero, plus you would be down $1600 from the initial expense and training. This would result in a negative return on investment, mainly if you have already performed the employee training.

On the other hand, how many places can you find with a strong chance Of 100% Return on Investment? Let me say - If something seems too good to be true, it probably is, and you should stay far away from it.

We Do Like Managed Risks

This is anything we can control the input and have a more remarkable than the breakeven chance of making a profit. We pay close attention to the higher levels of math and how it is used to predict probable outcomes accurately.

Decision Modeling

Decision modeling uses reliable QuickBooks reports to generate predictions of profit and loss based upon re-allocating resources and aligning your Business Process Management system processes to present to you a variety of possible outcomes. It offers you a way to attach knowledge, expertise, and analytic insights. As possible results are analyzed, decisions become easy because the goals, processes, and data come together.

As contractors like you move away from gut-level decisions and begin relying on your construction accounting systems to provide helpful financial and job costing reports, it will open a treasure chest busting at the seams with practical knowledge which can lead you to earn massive profits and, by extension, increase your wealth exponentially.

Knowledge Leads To Profits And Cash Flow

What Makes Knowledge Powerful?

Use Of Knowledge!

If you could harness and truly understand even half of the information in your existing QuickBooks company file and truly understand it, you could quickly become wealthy, debt free, and live the lifestyle you deserve in five years or less.

Final thoughts

While making a large purchase to benefit your business can be daunting, significant rewards often come with taking the plunge. Do your research, calculate if the investment is worth it, and then move ahead confidently. If you calculate correctly, you will find that your purchase takes your construction business to new heights.

About The Author:

Sharie DeHart, QPA, is the co-founder of Business Consulting And Accounting in Lynnwood, Washington. She is the leading expert in managing outsourced construction bookkeeping and accounting services companies and cash management accounting for small construction companies across the USA. She encourages Contractors and Construction Company Owners to stay current on their tax obligations and offers insights on managing the remaining cash flow to operate and grow their construction company sales and profits so they can put more money in the bank. Call 1-800-361-1770 or sharie@fasteasyaccounting.com

This Podcast Is Episode Number 516, And It's About Construction Business Growth Through Networking And Having A Mentor

Most business owners receive plenty of well-intentioned advice and 'helpful opinion' from family and friends. However, good business advice spoken from commercial experience is another matter entirely.

That's not to say it's hard to find, but finding a reputable source in the Internet age is sometimes less than straightforward – especially if you have a specific problem to solve and limited time.

This is why, for good times or bad, developing a network of peers or seeking out a business mentor can be a great idea.

Networking

Business owners shouldn't feel they need to operate in isolation. There are several options to consider, and you're not limited to only one or a few. Developing a network of peers and colleagues is an excellent way to keep in touch with new developments, and you'll have a great resource to access when you need input and advice.

Your local chamber of commerce

Your local chamber of commerce is likely to be a helpful resource. They should be able to put you in touch with industry bodies and refer you to people who can give you professional advice. In addition, they might also have information and resources to help you deal with the issues you are facing. Attending meetings and events is also an excellent way to brush up on skills and meet and network with other business people operating in your area. Local chambers can be found online through the US Chamber of Commerce.

Your industry body

Most industry sectors have some organization representing the collective interests of businesses operating in the sector; some will have more than one. They can give you industry-specific advice and put you in touch with other people in your line of business for input.

These sources should also be able to refer you to reputable outside professionals if you need the help of an accountant or a lawyer, for example. They will generally also hold regular meetings where you can meet and get to know other small business owners.

Once you've met or contacted a business peer or professional, swap business cards and keep their details on file; while you can do this manually, it would be more effective to include their details in your contacts on your computer and mobile and to connect with them through other networks like the business-focused LinkedIn or even Twitter. If you keep people's contact details, you can give them a call whenever you need assistance. Even if they cannot help you, they might be able to suggest someone who can.

LinkedIn is a great networking resource for business people. You can join several online groups to ask relevant questions and get good advice. You can create your own if you can't find a forum to suit your needs.

We are also highly recommended on Alignable, and we recommend it, too. It is a great way to connect with local business owners and work-from-home entrepreneurs who are also there to network and market their services and might need a plumber, handyperson, roofer, or remodeling soon.

Credible online sources of advice

It would probably be best to meet face-to-face with your banker, accountant, or lawyer for financial or legal advice, depending on the advice you need. But there are several additional resources you can turn to for assistance.

• The usa.gov site dedicates part of its site to small and medium businesses.
• The United States Patent and Trademark Office website lets you do many online functions.
• For the answers to several employment or health and safety issues, look at the United States Department of Labor website.

Business mentors

If you're not looking for business advice on a particular problem but are more interested in long-term direction to help you grow and develop your construction business, you should consider getting a business mentor.

Mentors can act as an experienced sounding board for ideas and help you consider long-term strategies, assess your business from an independent but supportive point of view, and even connect you with others from their business networks.

So how do you connect with a mentor and get the most out of your mentor-mentee relationship?

Perhaps you already have an accountant but would like a Construction Accounting mentor. The first step to seeking a mentor is knowing the kind of guidance you and your business would most benefit from right now.

For construction business owners in the early start-up stage, someone who can provide advice for surviving the first few lean years—and someone you can get in touch with more often—may be the perfect fit.

In this scenario, finding a mentor with a background in your industry is a plus. Mentors with relevant experience have been where you are now and understand all your issues and frustrations.

Let's face it: all business owners are busy people. And although meeting with a mentor consistently is most beneficial, doing so in person regularly can be a challenge for both parties. For some mentors and mentees, what works best is video calls. Our Contractor Bookkeeping Review, for instance, offers consultation and mentoring from Sharie and works well through a phone call or in-person meeting.

To get the most out of mentoring—and to demonstrate how valuable your mentor's help has been—be sure to follow up on your progress. A mentor will appreciate hearing how you've put their advice to work, your milestones and successes, and the goals you'd like to work on in the future. Acknowledging your progress will help you stay motivated by seeing how far you've come.

Final thoughts

Profitable contractors attend networking events not because they have nothing better to do; they do it because it pays off. You can either spend hours doing office tasks like bookkeeping or getting face-to-face with someone who may need your services. Meeting people gives you the chance to build and develop relationships, hire you, or refer you to someone who might.

The opportunity to learn from not just an accountant but your Construction Accounting mentor can do more for your business than any course, educational program, or degree. Being a mentee means you get first-hand experience without dealing with all the mistakes yourself.

About The Author:

Sharie DeHart, QPA, is the co-founder of Business Consulting And Accounting in Lynnwood, Washington. She is the leading expert in managing outsourced construction bookkeeping and accounting services companies and cash management accounting for small construction companies across the USA. She encourages Contractors and Construction Company Owners to stay current on their tax obligations and offers insights on managing the remaining cash flow to operate and grow their construction company sales and profits so they can put more money in the bank. Call 1-800-361-1770 or sharie@fasteasyaccounting.com

This Podcast Is Episode Number 515, And It's About What Every Trade Business Owner Should Know About Raising Prices

Raising prices can be a sore subject. Many construction business owners like you assume doing so will spell the end of your competitiveness. But by not raising prices, you're simply letting inflation and your suppliers' maintenance of your margins quietly eat away at profitability. The bottom line is that costs will always rise long-term - at least with inflation.

That means you have to pass on the costs to your customers or consume those costs yourself to the point where one day, you'll have to either suddenly raise prices or accept the eventual failure of your business.

The worst thing you can do is avoid measuring your costs by sticking your head in the sand. Cost rises will catch up with you eventually, so take action to maintain your margins.

Analyze and reduce your costs

Regularly check the accuracy of the prices you use in your forecasts and break-even calculations. If you're using outdated costs, your predictions could be dangerously off course from the actual performance of your business.

Ideally, you should have your figures analyzed by a professional accountant with experience in the construction industry - and even then, you should remain directly involved to maintain an understanding of your books.

But if that's impossible and you have to make your own costs and margin analysis, try using the following tips to help you resolve any profit issues.

• Analyze costs and profits on an individual product and service level first before looking at the business as a whole. You may miss critical financial details if you try and cut straight to the chase.
• Try making minor, subtle adjustments throughout your range rather than hiking prices on one service, even if the margin on that particular item is the one causing the biggest headache. Sharp, sudden price rises are more likely to attract a long-term adverse reaction from the target market than almost imperceptible ones they can easily accept.
• If you find a loss-making product in your books, don't immediately delete it. Consider first whether it's required to aid sales of profitable services.
• Schedule small price increases every six months or years rather than waiting every few years to raise prices more noticeably.

Increase your prices

If your costs are optimal, look at the other end of your margin - the price.

You may be hesitant to raise prices because you think any price advantage you have over the competition is too significant to lose, but if you give customers more compelling reasons to hire you, you may be able to justify a higher price.

Remember, it's all about positioning. Premium pricing reinforces the value of a premium service. If your market research tells you there's a gap in the market for a value alternative, fill it. But if there's also a gap for a superior choice, take that option if you can deliver a product or service to the required standards.

Why? Put simply; there's always someone willing to go cheaper. Look at how large shopping outlets use their buying power to find ultra-cheap stock and take customers away from smaller businesses with tighter margins.

Many small business owners take it as gospel that the last thing they should do is raise prices, but the opposite is true more often than not.

Just make sure that if you do raise your prices, you do so:

• At a fair pace and intervals instead of raising prices in a way that will shock the market
• With consideration of the market's price tolerance

Alter your product or service mix

Any two margins are rarely the same in a range of products, so why focus equally on selling them all if concentrating on the higher-margin products will increase your income?

If costs and pricing are optimal, altering your product mix is the only way to maintain or increase your margins.

This means being ruthless and chopping products or services that may be close to your heart to focus instead on those that bring people in through the doors.

Look at your margins, pick the top earners, and focus your marketing efforts on promoting these products and services above the others.

Pricing Feasibility

Your prices must be set to cover your costs and provide you with a healthy margin, but they also need to be developed considering your target market's tolerance for pricing. If you don't do this, you could price yourself out of the market or underestimate the value of your products or services.

You'll be tempted to let your competitors dictate your pricing, but you need to build a comprehensive pricing strategy that reflects the value of your product and the price your market might be willing to pay for it.

Carry out market research

Finding out the price expectations of your target market may be as easy as simply asking them. The key is to get an accurate idea of your offering's value before you enter the market. The best way to do that is by directly talking to your target market. Conduct surveys or, if you already have a working product prototype or service concept, form a focus group to gain their instinctive responses and opinions on how much value they'd place on your offering.

Ask them:

• The price they'd expect to pay for a product or service like yours.
• Where else do they buy, and why.
• What typically influences their purchasing decisions (you may find competitive pricing isn't as crucial as you expected).

Remember that the prices you choose must reflect your position in the marketplace if you want your brand to thrive.

At the end of the process, you need to know the following:

• Whether your service needs to compete directly on price or whether it's innovative enough to charge a premium for.
• The maximum price ceiling the target market will tolerate.

Consider test marketing

If you struggle to estimate your market's price tolerance, consider releasing your service on a small, limited scale as part of a test marketing exercise.

You'll be able to get direct, valuable feedback from customers on what they think about your product or service and its pricing.

Assess costs and margins

Once you know your target market's price expectations, you can start looking at the feasibility of meeting them.

Assess your cost and supplier options, and produce financial forecasts that could give you a long-term view of profitability.

A cash flow forecast will give you a clear idea of the possible return on investment you could expect, while a break-even calculation will estimate the minimum performance (in units sold or hours) you'd need to meet before you start making a profit.

These forecasts will be critical to your strategic decisions. Consult an accountant to make sure you've accounted for all your costs.

Use your forecasts to answer these questions:

• Will the return on investment be worth your while?
• Can you trim your costs to improving your margins?
• Should you consider a more premium pricing strategy to improve your margins?

Final thoughts

While it may seem scary, remember that your job is to keep prices fair for you and your clients. That means you must charge fees that work for you and allow you to remain operational. It's just good business sense. Whatever the case, research and review your prices often to ensure you position your trade business correctly.

About The Author:

Sharie DeHart, QPA, is the co-founder of Business Consulting And Accounting in Lynnwood, Washington. She is the leading expert in managing outsourced construction bookkeeping and accounting services companies and cash management accounting for small construction companies across the USA. She encourages Contractors and Construction Company Owners to stay current on their tax obligations and offers insights on managing the remaining cash flow to operate and grow their construction company sales and profits so they can put more money in the bank. Call 1-800-361-1770 or sharie@fasteasyaccounting.com

This Podcast Is Episode Number 514, And It's About How To Attract Profitable Construction Clients

This Podcast Is Episode Number 513, And It's About Seven Ways Your Construction Business Can Market Its Services

When you go into business as a tradesperson, you often focus on performing your trade to the best of your ability – as it should be. With time, the quality of your work will speak for itself, which is the most valuable testimonial of all.

Before the internet was commercially available, just as many experts advised contractors about the layout and design of yellow page ads and which books to spend money on, I say you spend money because that is what it was - Marketing.

Many of us who owned and operated construction companies spent thousands of dollars on these experts. Based on their recommendations, we spent tens of thousands of dollars annually in full-page yellow page ads as close to the first position.

Spending Money Is Easy, Investing Money Takes Work

However, any trades accountant or bookkeeper will tell you there's more to it now. While your good reputation preceding you is undoubtedly essential, there are a few other ways that you'll want to market your services to ensure that you have a steady stream of work. Read on to learn seven paths you can market your construction business.

1. Appear in directories

Since setting up a new business is usually a digital experience, it's easy to overlook the step of making sure you appear on a physical list where people can find you. Ensure your trade business is on relevant trade directories in your area.

Additionally, make sure you appear in the online equivalent. Yelp, Google, and Facebook each have business directories. And let's not forget the old standby: the phone book. Yes, they still exist! They are valuable resources for some people looking to hire a tradesperson.

2. Have a website

Some website-building platforms are very user-friendly, but hire someone if you feel that's beyond you. Almost everyone does an online search before they hire a business, and not having a website is like waving a giant flag that says you're out of touch, old-fashioned, or possibly not legitimate. Meanwhile, having a website reassures people that you are who you say you are and can provide the services they need.

3. Leverage social media

Nothing is more substantial than a good referral, and people naturally turn to social media to find out what your customers are saying if they don't know someone who's used your services personally.

Keep your social media presence strong and engaged. If you're uncomfortable doing this, hire someone to do it for you. It's critical when doing business today.

4. Offer referral promotions

When you wind up with a happy client, give them an easy way to speak positively about you and suggest you to their friends. A card or a thank-you email with a discount code will do the trick.

5. Run ads

Construction marketing can be tricky because, typically, your services aren't always needed. But when you are required, it's usually urgent.

If your trade business doesn't appear on the first page of Google, it might be worth your while to take out an online ad. That way, when someone searches for a tradesperson in your area, your business will appear next to their search. The only way someone can click on your information is if they see it – so make sure they have that chance, whether through an organic search or a paid ad.

6. Make yourself visible in the real world

Make sure your construction business's name and logo appear on any equipment you use, and make clothes for your team to wear when they're out and about.

It may be smaller than a billboard, but driving and walking around letting people know who you are, what you do, and how to contact you will go a long way to marketing your company. If people become familiar with your business name, they'll likely turn to you when needed.

7. Good old-fashioned snail mail

Believe it or not, print campaigns are alive and well! If you operate a construction business whose services are sorely needed in a specific area, consider making a print ad to pop into mailboxes. A word of warning, though – make sure your print ad is relevant, valuable, and eye-catching. You don't want to spend money producing something that will immediately go to the recycling bin.

Final Thoughts

Marketing for trade businesses is a lot like any other type of business in that you have to understand your audience and their needs and show up when they're looking for you. With some research and proactive planning, you can be sure your business will appear in the right place and time.

Continually examine your approach. Instead of yellow pages people, I see many well-intentioned people with their minds and hearts in the right place that have great ideas on what works and fails in social media. I certainly don't know what works for every contractor; however, I do know that every construction company is unique, and what works for your competitor may not work for you.

I encourage you to develop your market tracking system along with these methods. Perhaps you will discover what works best for your construction company and increase your sales bottom line profits. If I can be of service, don't hesitate to contact me.

About The Author:

Sharie DeHart, QPA, is the co-founder of Business Consulting And Accounting in Lynnwood, Washington. She is the leading expert in managing outsourced construction bookkeeping and accounting services companies and cash management accounting for small construction companies across the USA. She encourages Contractors and Construction Company Owners to stay current on their tax obligations and offers insights on managing the remaining cash flow to operate and grow their construction company sales and profits so they can put more money in the bank. Call 1-800-361-1770 or sharie@fasteasyaccounting.com

This Podcast Is Episode Number 512, And It's About Understanding Cultural Differences Within Your Company And Clients We're in a dynamic, multicultural country with many different races of people from diverse origins, just within the domestic market; it's vital that you know who might be interested in your goods or services and how they could perceive particular messages.

Whichever specialty your construction business is in, cultural differences can directly impact your profitability. If you try to understand your crew's and clients' cultures – their customs and differences – you'll have a better chance of keeping them and gaining more, respectively. Suppliers, vendors, and service providers respect leaders who have a vision, mindful and considerate, and can power through every obstacle to achieve success. They will support you in ways you cannot even imagine because it is in their best interest. Decide how you want to lead, how you want to be respected, and the work culture you want to create.

Ensure certain business areas don't offend potential subcontractors and clients from different cultures.

• Body language – it's important to know what body language to communicate to potential staff or clients you meet or in visual advertising directed at your customers. For example, if your business has a sizable Indian customer segment, be aware that a typical western hand wave meaning 'hello' is usually interpreted by Indians as 'go away' or 'no.'
  
  
• Communication – the secret to success in any business. If your company can communicate on the same level as your local customers, you're already heading in the right direction. One example that failed miserably was when PepsiCo marketed Pepsi in Taiwan using an ad tagline, "Come alive with Pepsi!" They didn't realize the Chinese translation meant, "Pepsi brings your ancestors back from the dead!"
  
  
• Awareness – simply being aware of your prospective customers' cultural backgrounds will allow your business to convey its messages more accurately and with less chance of offending.

By drawing up some personas of the main types of clients in your target market, you'll begin to break down what each kind of personal values. You may even find their trigger points – those that make the purchase.

Ensure you're familiar with each persona:

• Etiquette – such as getting to know the culture of Chinese customers and being patient when conducting business.

• Dress – if you have significant customers in the Pacific Islands, it's more common to dress informally when doing business.
  
  
• Business and religious customs – familiarity can go a long way toward a successful business. For example, Japanese people consider it rude to make demands when doing business, while Indonesian people prefer to do business face-to-face.
  
  
• History – if you're kicking off an advertising campaign that uses an aspect of history to get your message across, make sure it's accurate and not likely to offend a particular demographic.

Simple acts of mindfulness promote a positive reputation for your construction company. One common example: When working on residential projects, it is important to note that Asians, in general, and most Eastern Europeans, dislike wearing outdoor footwear inside their houses. It is customary to remove your shoes or wear shoe covers to show respect as you enter; not only that, it ensures the floors and carpets are clean and clear of possible mud and dirt.

Often businesses don't take sufficient time to have people on the ground interacting with their potential customers. There are language barriers and different customs that need to be considered.

Speaking with advisers who have the exact origins of your major market segments is a brilliant idea. The advice could prove invaluable – ensuring you don't offend through ignorance or lack of knowledge.

You must ensure all aspects of your marketing work together, delivering the same message – one that's aware of the cultural differences amongst your clients. By being aware of the critical factors impacting your business, you'll set yourself up to maximize sales from a global melting pot of potential customers.

About The Author:

Sharie DeHart, QPA, is the co-founder of Business Consulting And Accounting in Lynnwood, Washington. She is the leading expert in managing outsourced construction bookkeeping and accounting services companies and cash management accounting for small construction companies across the USA. She encourages Contractors and Construction Company Owners to stay current on their tax obligations and offers insights on managing the remaining cash flow to operate and grow their construction company sales and profits so they can put more money in the bank. Call 1-800-361-1770 or sharie@fasteasyaccounting.com

This Podcast Is Episode Number 511, And It's About The Difference Between A Construction Accountant And A Tax Accountant

How often have you hired someone with the expectation that they know how construction works, and then you found out they did not know about it? You are a master in the construction industry, so you recognize what to look for in your particular field and quickly observe if someone has the skillsets, and you proceed accordingly.

You know what happens when you send your best Rough Carpenter that you pay piece work for framing spec from the ground up in all kinds of weather and working conditions to install some custom-made cherry wood cabinets with gold plated pulls and knobs in the home of your best client (who happens to be in the wealthiest neighborhood in your town). It is not a pretty sight.

Have you pictured a crew with muddy work gear and boots stepping onto your client's pristine floors? The dirty secret is that Tax Accountants operate like Rough Carpenters because they work fast and furious, and they are paid piece work. The main difference is that they earn the bulk of their annual income in three and a half months. This means they do not waste time going through your receipts to ensure you get all the deductions you are entitled to.

Both Groups Are Important, And Each One Fills A Need

Project Management Construction Accounting Professionals (PMP) work above the line and focus on generating positive outcomes and results for contractors:

• Increase Sales
• Reduces Expenses
• Increase Net Income

Certified Public Accountants (CPA) work below the line focused on filling out annual income tax forms, ensuring contractors pay their fair share of taxes, preparing certified financial statements, and performing audits on your QuickBooks contractor file.

Three Times Construction Contractors Need A CPA In Their QuickBooks For Contractors File:

• You apply for a large loan or line of credit over a million dollars
• You need certified financial statements to get a performance bond
• Your construction company is so large that you are required to have an annual audit

Most construction contractors with annual sales under $10,000,000 and less than 20 employees will never have those issues.

Preparing end-of-year reports and filing taxes can be complicated. If you're not doing it right, you could be liable for penalties or, at the very least, not take advantage of tax gains and financial opportunities. A Construction Accountant can ensure your business remains compliant (and pay as little tax as possible), help you analyze your business performance, and work with you to achieve your goals.

On the other hand, Tax Accountants can kill more cash flow and profit in your construction business (in less than an hour) by preparing your annual tax return using a messed up QuickBooks file than you can make up for with hard work in several months, if not years. This is because saving you money on your tax bill is not what they are paid to do; they are paid to fill out tax returns.

Why does it need to be separate?

Trust but verify! When you need financing, most bankers and finance sources like to see a separation of duties. They want to see two different firms involved because it reduces the chance of errors, collusion, cover-up, and fraud. They may not say a word to you; however, we often hear about it!

We insist our construction contractor clients use an outside CPA or tax preparer to review the QuickBooks Contractor's bookkeeping services that we have performed and prepare the annual income tax return. As a result, we have developed good working relationships with several CPA firms and yearly qualified tax preparers.

It is good to know our contractor clients trust us and know that we have their best interest in our minds and hearts; however, we are human, make mistakes, and welcome input from CPAs and tax preparers. It is all about teamwork and people working together to ensure everything in your construction accounting system works correctly.

Bottomline: Construction Accountants should not be preparing annual tax returns because nobody can serve two masters. Either be a Tax Accountant and serve the interests of the tax collection agencies or be a Construction Accountant and serve the interests of contractors.

Please don't think we are too hard on Tax Accountants. Understand that we have great relationships with them. We have had Tax Accountants review our QuickBooks and prepare our business and personal returns for over thirty years, and we refer many businesses to various Tax Accounting and Preparation companies.

What you need to look for is someone who is experienced, capable, and understanding. You should feel they'll be a good advisor and are interested in developing a long-term professional relationship with you.

Having the right Construction Accountant for your business leaves you free to focus on why you started the construction company in the first place – to see it grow and become profitable. A Construction Accountant and a Tax Accountant are integral to this because they'll keep your finances on track. Which, in the end, is the whole point.

About The Author:

Sharie DeHart, QPA, is the co-founder of Business Consulting And Accounting in Lynnwood, Washington. She is the leading expert in managing outsourced construction bookkeeping and accounting services companies and cash management accounting for small construction companies across the USA. She encourages Contractors and Construction Company Owners to stay current on their tax obligations and offers insights on managing the remaining cash flow to operate and grow their construction company sales and profits so they can put more money in the bank. Call 1-800-361-1770 or sharie@fasteasyaccounting.com

This Podcast Is Episode Number 510, And It's About How To Protect Yourself And Your Construction Business From Fraud Unfortunately, fraudsters are out there. They want your money and identity, and they're getting more sophisticated. There's a wealth of opportunity for swindlers to take advantage of people because so much of what we do is now online. There are ways for you to protect yourself, both by taking action and being aware of what's going on.

While they might get less information from a small business, thieves will easily access it. If your construction company keeps any time-sensitive information on a computer network—personal information, credit card details, or other vital data—you need to ensure your cybersecurity is top-notch so you, your business, and your clients are fully protected. As a small construction business owner, you may not have the significant security budget of a large company, but you can combat employee theft and protect yourself from financial losses if you can identify red flags and follow suitable preventive measures.

Here are eight ways to protect yourself from personal and construction business financial fraud.

1. Protect your identity

Getting someone's identity is often the first step to running up enormous charges in their name. Scary as it is, you can go bankrupt if someone opens credit cards using your ID and maxes them out before you know anything has happened.

Shred your mail and dispose of records securely. Dispose of any documents with your name or other information carefully. It may take extra time, but these small steps can save you a world of headaches.

2. Don't click on unknown links

Whether sent to you in an email or via text message – don't click! It's a popular tactic for fraudsters to send a normal-looking link that's harmful. Before you know it, you're freely giving away your information. Just don't do it. Instead, take the extra step to visit a website through its legitimate homepage or call customer service if you suspect a link is a scam.

3. Check your bills

With so many bills offered online, it's easy to forget to review them. Make sure to check your statements for accuracy every month. It's the only way to identify fraudulent charges and correct them.

4. Don't put your personal information online carelessly

Think of this like putting the toothpaste back in the tube – it just can't be done once you've squeezed it out. The same goes for putting your personal information online. Fraudsters can use something as innocuous as your birthdate or workplace to verify your identity and expose you to financial fraud.

5. Never give up information over email or on the phone

The pandemic made us especially susceptible to being taken advantage of because so much was changing at once. Extra government programs were in place, vaccination campaigns were underway, and this administration meant more phone calls, text reminders, and emails.

Trustworthy institutions typically do not ask for your personal information in these ways. If you get a suspicious phone call or email, hang up and call them directly. That extra step can save you a lot of money and stress. It's too easy to fall victim to one of these scams, especially if the caller claims that a loved one is in trouble and needs help – a common tactic these days.

6. Be cautious when shopping online

Fraudsters are getting savvy when it comes to tricking us online. It's not uncommon for a fraudulent website to appear exactly like a legitimate place to shop. Double-check web addresses and question deals that seem good to be true.

Be aware of spelling mistakes or awkward grammar on these websites. They're often a giveaway that it's a lookalike designed to trick you into handing over your information.

7. Check your credit report periodically

If you live in a region where you can get free credit reports that don't harm your credit score, take advantage of this from time to time. It's an excellent way to know if loans have been opened in your name or to be alerted to any other suspicious activity.

8. Set spending limits on your credit and debit cards

Most cards can be set up to alert you of purchases, and you can set the parameters of when that happens. If someone has your credit card information, it's not uncommon for them to run through several smaller purchases as a sort of test to see if you're paying attention. Set up spending alerts so you can stop them in their tracks.

A Note on Construction Bookkeeping Embezzlement/Employee Fraud

Bad Bookkeepers will leave you with unfiled and unpaid taxes. They come from every race, creed, color, gender, and age. There is no definitive profile or absolute way to know which contractor bookkeeper is an embezzler until they have been caught and convicted, and even then, if you do not perform extensive background checks, you may never know it until it is too late.

Just because you catch a bookkeeper embezzling funds, don't think for one minute that they will always be punished and made to pay you back. For the most part, you must understand that employees are poor innocent victims of brutal greedy business owners in the eyes of the public.

I have seen bad bookkeepers ruin too many businesses, especially construction businesses. In most cases, it was Bookkeeper Incompetence or Bookkeeper Embezzlement, and in other cases, it appears there may have been some deliberate identity theft; however, I cannot be sure.

What you can do:

Monitor your financial records closely, and investigate if you come across the following discrepancies:

Mismatched payees: the name on a cashed check doesn't match the name entered in the general ledger

Identical payments: two checks have cleared for the same amount to different vendors in the same date range; one may have been authorized on the strength of supporting documentation for the legitimate payment.

Questionable companies: a supplier or vendor with unprofessional invoices (i.e., apparent errors, a missing or incorrect address, home address, or non-existent web presence)

FEA Cybersecurity

As an accounting firm, our client's privacy and security remain our top priorities, and we are continually looking at ways to develop and evaluate our system to prevent a breach and network holes. We utilize 128-bit Secure Socket Layer encryption, which ensures that all data passed between the web server and browsers remain private and integral. There are two levels of restrictions, and passwords must be entered before you can get your data file.

At Fast Easy Accounting, Cloud Security is not an option- it is a fundamental requirement. We only use Intuit Approved Commercial Hosting Services. Their Cloud Security rests on U.S.-based servers, backups, data centers, and technical support. Not one aspect of our Cloud Security relies on outsourced services or offshore locations. We have taken steps to select the best to ensure that your data is as secure as that found for online banking and financial institutions.

Final thoughts

It's a big, connected world, but modern technology has also made us more susceptible to fraud. However, with a few good habits and suitable tools and practices, you can protect yourself from personal fraud and continue enjoying online life's conveniences.

Let this post be a reminder to watch for suspicious employee behavior. Segregate financial roles so no one has unlimited access, control, or opportunity - and ensure your bookkeeping is always up to date so any "red flag" scenarios can be dealt with promptly.

About The Author:

Sharie DeHart, QPA, is the co-founder of Business Consulting And Accounting in Lynnwood, Washington. She is the leading expert in managing outsourced construction bookkeeping and accounting services companies and cash management accounting for small construction companies across the USA. She encourages Contractors and Construction Company Owners to stay current on their tax obligations and offers insights on managing the remaining cash flow to operate and grow their construction company sales and profits so they can put more money in the bank. Call 1-800-361-1770 or sharie@fasteasyaccounting.com

This Podcast Is Episode Number 509, And It's About Growing Your Construction Company Through Collaboration And Partnership

Operating and growing your construction business requires more than functional and skilled employees, but it's an excellent start. You need a steady stream of quality, paying clients to keep your company afloat. Likewise, deciding on an online marketing plan can be overwhelming for company owners like you who are looking for affordable ways to nurture consistent, sustainable growth. With time in short supply, the key is to find one or two growth strategies that will get results at a minimal cost.

Building a construction business requires collaboration and partnership. The deployment of employees in a way that allows them to work together to problem-solve and act with a shared sense of urgency; and increasing brand awareness through an alliance with people in the industry are simple, cost-effective ideas for building your company within, in the office or job site, or externally through referral and online connections.

When this occurs, you and your crew come to leverage the strengths of one another as you work to achieve shared objectives vital to your company's growth. Also, mutual learning occurs, increasing the probability that each employee's performance will evolve from good to better and then best. In turn, a construction company's performance improves as well.

Collaboration

As collaboration occurs, your team can leverage individual differences to produce exceptional outcomes. This knowledge-sharing creates a learning enterprise in which employees more readily identify solutions to problems. Consequently, your construction company may become more operationally and financially successful.

A collaborative environment makes a range of disciplines accessible on an as-needed basis, which leads to the efficient use of employee talent in a way that isn't possible otherwise. It allows your crew to complete a task at hand, making it more likely that the right talent is available at the right time. With collaboration, jobs are done more efficiently, leaving more time for the staff to concentrate on activities that contribute to company growth.

A group brings different perspectives to a problem at hand. As individuals share their views, each team member considers issues from multiple viewpoints, and the person begins to think like the group. The culture change contributes to new thinking, which may lead to new plans and ideas to deliver your services. In addition, diverse and complementary talent may enhance individual work processes as each of your employees becomes a part of a greater whole, which can positively affect your construction company's culture.

A team succeeds or fails according to the combined capabilities and commitment of the individuals involved. Deploying a variety of unique strengths and skills advances a team's understanding of a problem, leading to faster problem scoping and solution formulation and more effective solutions.

Partnership

This simple growth hack is influential both on and offline. A partnership with a company that provides complementary products or services can quickly increase your online email lists and boost your sales figures.

There are many ways a business partnership could work – you might negotiate a joint venture, host an event where you promote each other's products, run a giveaway together or launch a combined product or service.

It doesn't have to be a formal business partnership, but reach out to businesses in complementary industries to suggest a referral relationship in which you refer relevant clients to each other. You could also agree to partner up on specific projects. For example, a kitchen remodeler and a flooring contractor could refer clients to each other or work together on projects requiring both skills.

Keep in mind, though, joint ventures are a bit like change orders. They can be an incredible opportunity to make or lose money very quickly. So, forming partnerships doesn't necessarily mean a business merger but more on providing customized help to a client that needs a range of solutions.

Final thoughts

Remember, communicating better is one of the most accessible and valuable skills you can learn if you look for ways to lead and collaborate more effectively. Effective communication will help you to gain the trust and respect of individuals around you, which is one of the most valuable assets you can acquire.

Collaboration is also an effective means of problem-solving because it allows a company to leverage individual employee differences, evaluate employee efforts in the aggregate and create a learning enterprise. When problems are solved more readily, resources become available to achieve other company objectives, including company growth.

Collaborating and forming partnerships are more impactful when you have written goals of what you want to accomplish and how much income you want to generate from all your efforts. I can help provide additional financial advice and support as you update your business plan based on your intentions and current financial records.

About The Author:

Sharie DeHart, QPA, is the co-founder of Business Consulting And Accounting in Lynnwood, Washington. She is the leading expert in managing outsourced construction bookkeeping and accounting services companies and cash management accounting for small construction companies across the USA. She encourages Contractors and Construction Company Owners to stay current on their tax obligations and offers insights on managing the remaining cash flow to operate and grow their construction company sales and profits so they can put more money in the bank. Call 1-800-361-1770 or sharie@fasteasyaccounting.com

This Podcast Is Episode Number 508, And It's About Seven Tips To Help Your Construction Business Adjust For Inflation Inflation has ballooned worldwide in recent months, and there's no question that small construction businesses are feeling the pinch. Supplies cost more, employees are hard to find, and your profits are shrinking.

This can lead to operating at a loss - spending more money than you make. Otherwise, you will eventually run out of cash reserves and be out of business. And while it's not uncommon, especially for new companies, it's still not ideal and shouldn't continue in the long term. Be aware of what's going on in your industry and adjust. Customers judge a business based on perceived value. If you're at the bottom of the pack price-wise, they're likely to skip over you to get a good deal. Price yourself accordingly to attract quality clients.

It's undoubtedly challenging, but you can weather the storm with the following tips.

1. Study your data

You first need to identify why you're operating at a loss. If you're still in the start-up phase, you might not need to worry too much as long as you've got enough cash to meet your costs. But if the losses are due to a decline in sales, then it's time to review your construction business and, if necessary, get professional help.

Your numbers are always helpful, but in times of rapid inflation, you'll be incredibly thankful that you keep a nice, clean set of books. Analyze your data to learn what products and services make you the most money, which ones cost the most to offer, and to identify where you can save.

2. Cut expenses

Now that you've identified where you can save money, go ahead and cut what you can. It's nice to be able to offer many products and services, but this is a time to tighten your belt.

Focus on the items that keep your business as healthy as possible, and ditch the rest – at least for the time being. It's okay to simplify, especially when times are tough.

3. Adjust your prices

Nobody likes to raise their prices, but you likely have no choice. Keeping fees the same would indeed be fantastic for your customers or clients. However, if you're offering your products or services at the same prices as before inflation started to climb rapidly, you're absorbing the cost.

When you dig into your data, you may find that some things you offer actually cost you a lot of money. That's not a sustainable business model – raise your prices to keep yourself afloat. You should always seek to raise your rates over time to improve your profit margins and keep up with inflation.

4. Simplify and automate

If aspects of your business take a long time to complete, see if there's anything you can do to reduce those hours. Switching to cloud accounting or inventory management software would be an excellent example, as doing so would allow you to use your valuable time elsewhere.

Identify where you can simplify and automate, and then do it. Then, even when inflation comes back under control, you will undoubtedly find that the saved time helps.

You can build efficient systems by streamlining your processes and using technology. There might be administrative tasks that you can ditch altogether.

5. Focus on your client

Remember that your clients are keeping you in business and experiencing inflation in their lives too – both at home and in their businesses.

Keep the lines of communication clear and open, especially if you're going to alter your offerings or raise your prices. It's easier to retain loyal customers than to gain new ones, so make sure they know how much you value them and communicate openly to maintain their trust and loyalty.

6. Consider your employees

Good help is hard to find. Those who work for you are feeling the pinch as well. While it's essential to automate what you can, you must consider the consequences it will have on your staff. Identify how you can better use their talents if parts of their roles become automated.

7. Remember, this will pass

Inflation has happened before and will undoubtedly happen again after this. Historically, periods of inflation last anywhere from a few months to several years. However, we remember one thing: all periods of inflation end.

Final thoughts

While inflation is problematic for small businesses, there are steps you can take to reduce its impact. You will leave this inflationary period intact with clear communication and intelligent adjustments. Focus on what you can control and face what you can't with confidence and creativity.

It's also important to review your practices honestly and carefully to pinpoint what you can improve in your construction business during this challenging period. Being proactive with your marketing, asking for an expert's help with your accounting, and putting a plan in place for production are necessary to operate and grow your company during this time.

About The Author:

Sharie DeHart, QPA, is the co-founder of Business Consulting And Accounting in Lynnwood, Washington. She is the leading expert in managing outsourced construction bookkeeping and accounting services companies and cash management accounting for small construction companies across the USA. She encourages Contractors and Construction Company Owners to stay current on their tax obligations and offers insights on managing the remaining cash flow to operate and grow their construction company sales and profits so they can put more money in the bank. Call 1-800-361-1770 or sharie@fasteasyaccounting.com

This Podcast Is Episode Number 507, And It's About Starting And Operating A Small Construction Business On Limited Funds

So you have a great business idea and are convinced you can make it work, but you don't have much capital to get your business off the ground. Juggling existing financial commitments such as a mortgage or bank loan could put a squeeze on your business plans. Many entrepreneurs use creative thinking and shrewd planning to get businesses off the ground with the smallest budgets.

Freelancers in all industries deal with the same problems due to the nature of their work. Most of you came from the skilled craftsman trades; some worked as construction company managers and have now started or thought of starting your business.

If you just did, congratulations, you have decided to own and operate a construction company. Practically, solo contractors manage every aspect of their business, but we are here to help you navigate it. Here are the things you need to consider (especially when you are on a limited budget) to keep it running.

Making your construction business fit your finances

Starting your company on the tiniest of budgets means working harder to ensure your business doesn't implode from a lack of funds. Even if you don't have funds, you probably have something that many established companies don't have - time. You can build income and cash flow from your hard work if you have time.

Remember that the easiest businesses to get off the ground with limited capital don't require plenty of resources or initial outlay. These are generally service-based businesses, such as handyperson and residential home-improvement services.

Minimizing costs and eliminating expenses

It goes without saying that if you have a limited budget, you will need to direct your spending where it has the most significant impact on your business. Here are some tips to make your money go further.

• Harness free business support. Business support or advice doesn't need to cost a fortune – there are plenty of ways to get help and build your knowledge for free. Use the Internet to research success stories in your chosen industry and find out if there are any government business mentoring services you could access. You could also approach your network of friends and family or industry associations to put you in touch with someone in your industry who could share their knowledge.
• Do it yourself. Almost any business task can be completed by yourself, depending on how much spare time you have. If you don't have the design budget for an expensive-looking website or are unsure how to design advertising material, consider learning how to do it yourself. For example, you might be able to attend a free or low-cost course on how to use design software or use Internet resources to teach yourself.
• Work from home or lease low cost. Working from home can be a great option; you don't need to meet clients at your premises, as most will invite you to their property. If you need a physical office to meet clients, leasing a room in a shared office or splitting the lease on a property with another business is an excellent way to minimize costs. Shared office spaces often have shared amenities such as meeting rooms and coffee break areas, which are great for meeting clients.
• Order only what you need. Avoid the temptation to order large quantities of stock from suppliers in anticipation of large orders. Less supply means you save on storage costs and reduce the risk of theft or damage. The downside is that you may have to pay more for items, lowering your margins, but you can order in bulk once the business is booming.
• Minimize fixed costs. The more fixed costs you have, you are financially tied down. Some fixed costs like power and telephone line rental can't be avoided, but other costs such as transport costs or office supplies will vary each month. Think carefully before financially committing to services that may not be necessary, such as expensive mobile data plans or a private mailbox.
• Use free or cloud-based software. Rather than paying for bundles of software, download software off the Internet instead. A variety of websites offer free word processing software, accounting platforms, and budgeting tools, either as a limited-time trial or completely free. There are also free or low-cost cloud-based versions of many commonly used programs. Cloud-based programs are stored on the Internet, so they don't require as much processing speed or physical space as those stored on your computer's hard drive.
• Use social media as a marketing tool. Creating a Facebook or Instagram account is free and provides you with a platform to market your business to your local community. Facebook also features a low-cost paid advertising feature you could use to drive potential customers to your pages. Social media pages can also be a free substitute for a website until you have enough money to create your own. You will need a significant online presence to gain customers and generate sales through social media, which takes time.

Directing profits back into your business

It may have taken a lot of hard work and determination, but you are now making sales. Spending money on yourself or some new gadget to reward your persistence is tempting. Avoid splashing out unless it will make a big difference to your business by improving productivity or operational capacity. It's generally best to put the money straight back into growing the backbone of your business – either by purchasing a piece of essential equipment or growing your client list.

Know when to spend

Like any start-up business, there will be times when you need to make big decisions, such as pursuing expansion opportunities or new markets. You might need to spend most (or even all) of your savings or consider borrowing to take advantage of new opportunities.

Final thoughts

Many aspiring to self-employment do not have any idea what freelancing entails. Contracting services to homeowners or individuals require lots of time and effort to earn a profit immediately. Employees tired of their own work lives idealize those of business owners and often ignore the difficulties faced in this environment. Before counting on notions of optimal freelancing experience, consider your own life, strengths, and abilities. Ask yourself these questions: "Am I ready to begin a long-term career in contractor work?" and "What do I want to achieve through my contracting business?"

f you are a new, struggling construction business owner, tackling these problems from the bottom up streamlines the path to success. If you ever become discouraged, remember that everyone starts at the beginning and that you can achieve your desired level of success if you put in the work to attain it. Again, you are not alone. Let me know how I can help you today by filling out the form on the right.

About The Author:

Sharie DeHart, QPA, is the co-founder of Business Consulting And Accounting in Lynnwood, Washington. She is the leading expert in managing outsourced construction bookkeeping and accounting services companies and cash management accounting for small construction companies across the USA. She encourages Contractors and Construction Company Owners to stay current on their tax obligations and offers insights on managing the remaining cash flow to operate and grow their construction company sales and profits so they can put more money in the bank. Call 1-800-361-1770 or sharie@fasteasyaccounting.com

This Podcast Is Episode Number 506, And It's About The Advantages Of Paperless Payroll In Your Construction Company

When you think of payroll, you might still envision paperwork and envelopes given to employees by hand. Even with direct deposit being the norm for years, there is still a significant paper component to manage.

You won't find a contractor using inefficient tools on the job site these days. The hammer or the nail gun? No question. While every contractor recognizes the flaws of using ineffective tools, they may still be losing money due to inefficient payroll tools and processes.

As with most things, payroll is going digital – for a good reason. There are many benefits to digital payroll for construction business owners and staff alike. Read on to learn why switching to paperless payroll could be right for you.

1. It empowers your construction employees

Your employees can log in to the system and access anything they need – anytime and anywhere. Pay stubs, hours worked, and so much more. It's all right there, which means they don't need to call or visit a specific department for help. If they have questions about time off or sick days, they can easily find that information.

When everyone can access what they need, it makes everything easier. It also means that whoever would traditionally have to pause what they're doing to provide information can stay on task.

2. It increases convenience and eliminates delays

When you're manually processing your payroll, delays come up that are a normal part of the contracting business. But that isn't the case when you take your payroll digital.

Because everything runs automatically, you no longer experience holdups due to holidays or slow mail. Additionally, everything is distributed instantly online, meaning everyone gets paid on time.

You'll reduce the chance of mistakes as well. Taking human error out of the equation means you no longer have to spend much time correcting mistakes or investigating what went wrong.

3. It keeps everything secure

Security is built right into paperless payroll systems. Employees have a unique username and encrypted password, which they use to access a secure online portal. Some even have two-factor verification.

All payment information is kept securely on the portal, accessible only to those with permission. With all data stored online, you reduce the risk of losing sensitive documents. You also don't have to worry about shredding confidential information. The risk of fraud is also nearly eliminated.

4. It saves you money, and valuable time

There are obvious cost savings in reducing the paper, postage, ink, and toner required to distribute paper pay stubs. Those costs are high, too. But you will see the most significant savings in the hours no longer needed to run your payroll.

With most of the process automated, it's no longer necessary to spend time tallying up hours worked, calculating overtime and sick pay, and then sorting out taxes. Instead, your software will take care of it for you.

5. It helps the environment

Finally, paperless payroll is nearly waste-free. You'll no longer produce stacks of paper, envelopes, and supporting documents, which add up in filing cabinets all over your office – which is only a pitstop before they're discarded.

Payroll Processing Not Fun? Outsource it!

• Having trouble processing payroll?
• Do employees ever turn in timecards late?
• Any difficulty keeping track of employee loans?
• Does keeping track of garnishments take lots of time?

Wouldn't it be great to get rid of payroll processing?

We understand construction companies and their payroll needs because we have owned and operated construction and service/repair plumbing companies for over 25 years, which means we know how to get payroll processed fast and quickly!

Everything runs smoothly during your regular pay schedule when timecards arrive on time. When employees do not turn in their timecards on schedule and expect you to have their checks ready, no worries, we have you covered:

• Process payroll outside your normal pay schedule - fast and easy
• Track and allocate garnishments
• Track and report on employee loans
• Track and information on employee reimbursements
• Everything for one flat fee and no long-term contract

Final thoughts

There are several benefits to adopting paperless payroll, and it's a popular system for employees and employers alike. When considering taking your payroll paperless, ask yourself what the needs of your business and your employees are. If both would enjoy the features listed above, it might be time to start thinking about making the switch.

Outsource your payroll processing to save time and money. Reach out to me at your earliest convenience.

About The Author:

Sharie DeHart, QPA, is the co-founder of Business Consulting And Accounting in Lynnwood, Washington. She is the leading expert in managing outsourced construction bookkeeping and accounting services companies and cash management accounting for small construction companies across the USA. She encourages Contractors and Construction Company Owners to stay current on their tax obligations and offers insights on managing the remaining cash flow to operate and grow their construction company sales and profits so they can put more money in the bank. Call 1-800-361-1770 or sharie@fasteasyaccounting.com

This Podcast Is Episode Number 505, And It's About Setting Construction Business Financial Goals For 2023 The new year is a natural time to decide what you want to achieve and how. Businesses tend to progress more consistently if the owner sets financial goals and makes a plan to achieve them. Your construction business (and personal) budget is one area where you should keep your resolutions from slipping. While it’s true that there’s also next year when it comes to your financial goals, putting it off has real consequences that equal less money and more work. So here are seven steps you should take in January to start your 2023 budget.

1. Review and evaluate your 2022 goals

You’ve got to see where you’re coming from to know where you can realistically go. At year’s end, review the goals you set last year and use your numbers to see how your business measured up.

Whether or not you met your goals, that information is valuable. What circumstances enabled you to meet your goals or prevented you from doing so? If you didn’t make a formal list last year, try to think of where you were a year ago and see if you progressed as much as you thought you would.

2. Use that information to set your 2023 goals

Now that you know how far you came in 2022, jot down what you’d like to accomplish in 2023. Don’t worry about getting specific here – it’s just a jumping-off point. Try to be ambitious without being unreasonable. Setting unreachable goals only sets you up for disappointment and a feeling of failure, which is entirely counterproductive.

3. Get specific

Flesh out your ideas by paying attention to the details. Use real numbers in your goals. Are you going to make more sales? Raise prices? Find new clients? Outline exactly how you’re going to get to these numbers. The more specific you can be here, the better. It will help you to make your dreams a reality.

4. Sort your goals into categories

Once your goals are outlined and detailed, look at them. Some plans are small and quickly achievable. These are fantastic ones to tackle early in the new year to boost your business and get you on the right track. Plan to get to these as soon as possible so you can reap the rewards.

There should be some items on your goal list that will take more time, effort, and planning. Break these bigger goals into smaller steps, and create a timeline for achieving each milestone.

You will likely have a handful of goals that fall somewhere in between. Distribute these evenly throughout the year in a way that makes sense for your business.

5. Break down the steps in each goal

With your short, medium, and long-term goals laid out, go over them with a critical eye. You need to ensure that each one has a clear set of steps to help you achieve it, especially if it is a bigger or more complicated goal.

Create milestones for each one of your goals, with what you need to accomplish broken down into manageable chunks. A complex goal may even require weekly targets to help you get to the finish line.

After finishing this step, you’ll have a detailed picture of what the year looks like for your construction business. What was once daunting becomes exciting! If you’ve balanced things out well, you’re likely to gain a feeling of accomplishment when you look at this goal map and will be keen to get things underway.

6. Check that each goal is SMART

Most of us are familiar with the concept of SMART goals, but we don’t always take the time to make sure they pass this check. Go over your goals to ensure that each is specific, measurable, attainable, relevant (or realistic), and timely. If each goal meets these requirements, you’re good to go!

7. Set reminders to check in each quarter

Accountability is key. Set up dedicated time at least once per quarter to review your progress. If you find that you’re falling behind, make a plan at that time to get things back on track.

Final thoughts

Most construction business owners have an idea of what they want to achieve each new year, but the only way to make those dreams a reality is to plan, plan, plan. It’s the best way to make sure your ambitions come to pass. After that, check in on your project regularly.

About The Author:

Sharie DeHart, QPA, is the co-founder of Business Consulting And Accounting in Lynnwood, Washington. She is the leading expert in managing outsourced construction bookkeeping and accounting services companies and cash management accounting for small construction companies across the USA. She encourages Contractors and Construction Company Owners to stay current on their tax obligations and offers insights on managing the remaining cash flow to operate and grow their construction company sales and profits so they can put more money in the bank. Call 1-800-361-1770 or sharie@fasteasyaccounting.com

This Podcast Is Episode Number 504, And It's About Year-end Closing And Planning For Construction Business Owners

The end of the year is typically a reflective time. Something about that lull between holiday festivities and New Year's Eve sets the stage for introspection and review. While you're busy reflecting on the year ending and making plans for the new one about to begin, make sure you take some time to consider your finances.

Preparing your End of Financial Year (EOFY) information often feels stressful—there are receipts to sort out and reports to review. You must ensure you have all the necessary information about your income and expenses. It can be overwhelming, and it can make the EOFY feel daunting.

The end of the financial year isn't just a time to collect receipts and find invoices. It's also a time to reflect on how your past year went, what went well and what didn't, and what you can change for next year.

Here are three tips to make the most of your end-of-financial year:

1. Consider redoing your files

One of the most overwhelming parts of the end of the financial year is finding all the invoices, receipts, and reports you need to file your taxes correctly. Pay attention to how easy it was—or wasn't—to find what you needed this past year.

Did you have to search 15 different places for all your receipts? Did you have a combination of online and physical invoices? Did you have clearly labeled folders for everything? Did you leave everything for the last minute?

If you found yourself searching high and low for every piece of paper you needed, you might want to consider revising your paperwork, so it's easier and less time-consuming to manage.

Can you keep track of everything through software and apps? Is there technology or equipment that can help you? Is it worth investing in a filing cabinet?

The effort you put now into sorting your paperwork will pay off hugely every year when you can quickly and easily find all the information you need. Let's face it; you'll come up against the end of the financial year every year, so you may as well be systematic about it.

2. Reflect on your year

The end of the financial year is a perfect time to reflect on how the past year went. Celebrate the big successes, but remember to focus on other victories. Even if you didn't meet your financial targets, did you survive a particularly tough year? Did you manage to pivot your construction business and try a new model? Did you take some risks and learn from them? Did you grow your business or expand your offerings?

It's great to have goals for each year and celebrate when you achieve them, but it's also important to look at where things didn't go according to plan and how you grew from those situations. You may need to refine your business plan if you're not meeting your financial targets or rethink how you arrive at your goals in the first place.

Do this before you start planning the year so you can revise your strategies in the future.

3. Plan for the future

Now that you've reflected on what went well and what went sideways, you can better plan for next year. Research upcoming events and schedule your marketing calendar. Plan to address slow times or busy periods. If you didn't meet your financial targets last year, either change how you set your goals or your strategies for achieving them.

Many retailers offer significant discounts at the end of the financial year. Does it make sense for you to make a purchase right now? Should you buy new equipment, technology, or other goods now? It may be worth it if you have the money to do so and need those items.

Although the end of the financial year can feel stressful, it's also a fantastic time to reflect on the past year and celebrate your achievements.

You can take the time to plan and incorporate the lessons you learned from the past year to make the upcoming year your most successful.

If you made your goals, that's great! If they fell by the wayside, look at what you could have done differently. Or, take some time to set a more manageable goal to get that sense of accomplishment next December.

Construction is a tricky business, and people's failure is common. Most of our clients and people who reached out have failed or come very close.

Very close doesn't mean failure because it doesn't matter how many times you are knocked down; it only matters that you learn your lessons, get up and go again.

This coming January, it's time to hit that reset button or, better yet, start again no matter what day of the month, no matter where you are in your construction company journey.

I chat with contractors like you every day. You tell me your stories. About your challenges in running a business, keeping up with the bookwork (accounting and bookkeeping). About estimating and bidding jobs, doing the work and collections from clients, having (or not having) employees, and paying their taxes.

Talk to your clients (or reach out to your previous ones) about their needs, too. Ask them how their habits have changed, what projects they're looking forward to this new year, and the challenges they're facing or, most likely, will need to address in the coming months - roof replacement, bathroom remodeling, renovation budget concerns.

Construction is what makes civilization and a civilized society possible. Because of the commitment of people like you to step out of your comfort zone and start a construction company and work it, we owe you all an outstanding debt of gratitude.

Thank you for working hard through these past few years when most of us are hunkered down, choosing to continue your service, and maintaining our homes, businesses, and community.

May this New Year bring you joy, hope, prosperity, and love.

About The Author:

Sharie DeHart, QPA, is the co-founder of Business Consulting And Accounting in Lynnwood, Washington. She is the leading expert in managing outsourced construction bookkeeping and accounting services companies and cash management accounting for small construction companies across the USA. She encourages Contractors and Construction Company Owners to stay current on their tax obligations and offers insights on managing the remaining cash flow to operate and grow their construction company sales and profits so they can put more money in the bank. Call 1-800-361-1770 or sharie@fasteasyaccounting.com

This Podcast Is Episode Number 503, And It's About Reclaiming Your Time And Switching Off During The Holidays

Small construction company owners like you already have a time-consuming and challenging job running your business. If you're working on weekdays, you usually need the weekend to catch up on paperwork, pay bills, and manage any tasks you didn't get to during the week.

But this weekend is Christmas, and with it comes time to relax, focus on family and friends and take stock of what is essential in life. Phone calls from employees dealing with a minor crisis will pull your focus from your family, or your Christmas dinner will be taken over by business talk. Like the merry bells of Christmas, your cell phone will constantly chime with the sounds of urgent text messages and emails that must be dealt with. Clients will need your attention.

So, if you've been waiting for a sign or permission to pause, this post could be the one you're waiting for. It's easy to let the construction company take over your personal life, but as a small business owner, it's vital that you get some time away from work.

Here are some tips for helping you switch off during the holidays.

1. Shut down entirely for the week

If your business can be shut down for a week, consider closing from Christmas to New Year. Your employees will love the time off, and you won't be

Small construction company owners like you already have a time-consuming and challenging job running your business. If you're working on weekdays, you usually need the weekend to catch up on paperwork, pay bills, and manage any tasks you didn't get to during the week.

But this weekend is Christmas, and with it comes time to relax, focus on family and friends and take stock of what is essential in life. Phone calls from employees dealing with a minor crisis will pull your focus from your family, or your Christmas dinner will be taken over by business talk. Like the merry bells of Christmas, your cell phone will constantly chime with the sounds of urgent text messages and emails that must be dealt with. Clients will need your attention.

So, if you've been waiting for a sign or permission to pause, this post could be the one you're waiting for. It's easy to let the construction company take over your personal life, but as a small business owner, it's vital that you get some time away from work.

Here are some tips for helping you switch off during the holidays.

1. Shut down entirely for the week

If your business can be shut down for a week, consider closing from Christmas to New Year. Your employees will love the time off, and you won't be bothered by urgent texts about something that went wrong at the office. This time is generally not as productive for workers, as they all want to get home, be with loved ones, and celebrate the season.

Just make sure you give your clients some notice that you're closing up. Good clients will respect your decision and even encourage it.

2. Have someone trained to deal with your absence

A big headache for small business owners is constant calls from employees who can't carry out basic tasks or make decisions. If you plan on taking time off but are leaving the business open, have someone senior available to answer questions or take over duties other employees can't.

Ensure employees are prepared for situations that could arise but can fix on their own. Can they use someone else's computer if theirs dies? If a client calls with a crisis, which staff members can handle each situation?

Assign one or two people—not you—to contact people in case staff needs assistance and give those two people strict instructions about when they can contact you. You don't need phone calls on your days off because someone doesn't know how to work the coffee machine.

3. Resist the urge to plan meetings during this time

When a client comes to you just before you take your days off and requests a meeting over the holidays, it can be difficult to resist that urge. That meeting, however, will take up time and space in your brain aside from the actual meeting time. You'll prepare for it, think about it, and plan what to say. If the meeting doesn't go well, it will affect the rest of your days off.

Instead, push the meeting until after the holidays. Unless the situation is dire, an extra week won't hurt. Or ask another worker to attend the session for you.

The key here is to delegate the tasks you don't need to do.

As a construction business owner, you have regular duties that need to be done but could be better done by an expert. Doing them yourself takes up a ton of your time. Look at your tasks and determine which ones are eating up your valuable time. Virtual assistants can now be hired to handle general customer service on your behalf. Could you hire a bookkeeper? An accountant?

Regardless of your current situation, if you need help, we can tailor a plan to fit your budget and your construction bookkeeping needs.

You will not know whether it is a good idea until we chat. One thing is for sure - hiring outside service providers costs money, but we are worth the expense when you consider the time and energy you'll save by not taking on that tedious bookkeeping tasks. Especially when you factor in the extra personal time you'll have.

We have options for your business accounting, whether you would like to outsource or do it yourself. Let's figure out a way to free some of your time and get your life back, be with your family and loved ones, and increase your cash flow and earnings while improving your quality of life and relationships.

Final thoughts

If you're taking time over the holidays, really take time. Don't take time off but then spend that time constantly checking for work-related texts and emails or attending meetings. Put your cell phone away. Stop checking your email. Set an outgoing email that lets people know when you'll respond to their messages, and change your voicemail to note your days off. That way, you can rest, relax, and enjoy your break. Your overall well-being is necessary to you, your business, and your community. You'll need this time to restore your energy for January.

I end this by wishing you a Merry Christmas and Best Wishes of Joy this Holiday Season. Enjoy. Be Glad. Be Joyful and maybe a little sad. But try to find something to be happy and grateful for each day. What matters most are our family, friends, and loved ones - those we celebrate with, those we can't be with, and those who are with us in spirit.

About The Author:

Sharie DeHart, QPA, is the co-founder of Business Consulting And Accounting in Lynnwood, Washington. She is the leading expert in managing outsourced construction bookkeeping and accounting services companies and cash management accounting for small construction companies across the USA. She encourages Contractors and Construction Company Owners to stay current on their tax obligations and offers insights on managing the remaining cash flow to operate and grow their construction company sales and profits so they can put more money in the bank. Call 1-800-361-1770 or sharie@fasteasyaccounting.com

This Podcast Is Episode Number 502, And It's About How To Prevent Your Construction Company's Yearly Cycle Of Chaos

The year is almost over. Fourth-quarter and year-end deadlines are approaching. Most construction business owners who reach out to us describe this as their "Year End Madness" to prepare their documents for the tax accountant.

The end of the year tends to be chaotic for construction company owners, but it's an excellent time to get some extra housekeeping done for your business. If you're on QuickBooks, you can click the Help Menu; depending on the year and version you're using, you can access the Year-End Guide, which will show you how to wrap up your business year. It's not an easy process, but it's all worth it.

Why? Because tax preparers will take what you give them - they don't have the time, and it's much work that you've paid for, but a good tax preparer will know how much you can save if you can track your money. Bottomline - pay your taxes right, but it doesn't have to be more than what you owe.

Since you have a few weeks left for December's statements, ensure everything from November back to January 1st is reconciled. Here are also a few things to catch up on:

1. Review your goals and Key Performance Indicators

A lot has likely happened for your construction business over the previous 11 months. The end of the year is the perfect time to look back and see how your performance is stacked against your goals.

Consider your KPIs and review how you did. Be honest with yourself. If you didn't make your goals, that's okay. Now you can look at what went wrong–or right–and adjust accordingly. Were there surprises that affected your business? Could you prepare more for slower times? Did you take on too much all at once?

If you met or exceeded your goals, take some time to celebrate the achievements.

2. Review your business plan

Seeing how reality compares to your original business plan is always surprising. Allow yourself to evaluate how you're doing and see if your construction business is becoming what you hoped it would.

If it isn't, ask yourself if your goals and vision have changed or if you haven't been focused enough on them. It's okay to adapt your dream as your business evolves and you understand the market better, but make sure the change is one you intend to make, not one that's happened unconsciously.

3. Reconcile accounts receivable

Unpaid invoices are often one of the biggest disruptors to cash flow. Check if you have any outstanding accounts and remind those clients to settle before the year ends. It also doesn't hurt to double-check if you have any amounts owing to your suppliers and pay those.

4. Catch up on expenses

This is especially important if the end of the calendar year also marks the end of the tax year in your location (as I would like to remind our readers from outside North America), but it's a good practice for anyone. Ensure you've accounted for any eligible business expenses by year's end to stay up to date for tax season.

5. Verify vendor or client information

You already know that your business has changed for the year. The same is true for all the other companies that you work with. Take some time to ensure you have their correct information and are aware of any changes to their business terms.

6. Review subscriptions

It's easy to let subscriptions fly under the radar, but they quickly add up. Review your active subscriptions and cancel any that aren't relevant anymore. It's easy to get more money in your pocket, and it's fun to choose some new ones for the new year that better meet your needs.

7. Send out year-end letters

Put together a year-end letter for customers or clients and another for employees.

Let your clients know what you've been up to over the year, share some of your milestones, and let them know how much you appreciate their business. Highlight any community events that your business was a part of. It's an excellent way to stay in touch and keep yourself fresh in their mind for when they may need your services in the new year.

Thank your employees for all their hard work over the year. Call attention to your successes and celebrate all that you've achieved. It's a great way to provide recognition and highlight the most important events of the year.

8. Consider end-of-year gifts or bonuses

The end of the year is a terrific time to reward employees for a job well done. Even if you have an established bonus program, it's always nice to surprise employees with a gift. It's a personal way to say thank you and tell them how much you appreciate them.

Final thoughts

The end of the year is notoriously busy, and the holidays make it even harder to get things done. However, it's a great time to reflect on and celebrate your accomplishments. You'll be glad you did when the new year rolls around, and you feel like you've wrapped the year up in a bow – ready to take on the next one with a sense of renewal.

If you are still asking yourself the $64,000 questions: What about this and that? Have I met my goals for this year? What should I do for the balance of this year? What are my plans for the start of next year? Should I start now? Should I wait? I can't decide! - It is time to start fixing those loose ends now! The reports are only as good as the data received. Contact me to discuss your needs. If you don't know the answers tell me as much as you can, and I will do my best to "fill in the blanks."

About The Author:

Sharie DeHart, QPA, is the co-founder of Business Consulting And Accounting in Lynnwood, Washington. She is the leading expert in managing outsourced construction bookkeeping and accounting services companies and cash management accounting for small construction companies across the USA. She encourages Contractors and Construction Company Owners to stay current on their tax obligations and offers insights on managing the remaining cash flow to operate and grow their construction company sales and profits so they can put more money in the bank. Call 1-800-361-1770 or sharie@fasteasyaccounting.com

This Podcast Is Episode Number 501, And It's About Key Drivers To Improve Construction Profitability And Cash Flow

Enlightened contractors like you understand the value of developing your own unique Construction Contracting System, a collection of documented repeatable processes and operation manuals. The key is continuously refining your construction company's practices and procedures.

Your office ensures your contracting company has a steady flow of projects. Proper accounting and bookkeeping develop timely financial reports to show which jobs are profitable so you can pursue more. Thus, you can focus more on the following:

• Acquiring the right clients
• Doing the project as close to on time and budget as possible
• Get job deposits and timely progress payments
• Follow-up with clients to monitor satisfaction and line up new projects

Boost profitability by recognizing your key drivers

Identifying the key drivers of your business is critical to boosting profitability. A key 'driver' significantly impacts your specific construction business's performance.

A whole range of factors can affect the performance of every business. The secret is to focus on a handful of drivers that:

• Affect the performance of your business significantly
• Are measurable
• Can be compared to a benchmark, such as last year's figures or an industry average
• Can be acted upon

Make use of benchmarking

Use past figures as a benchmark for current performance. Figures for last year or last quarter provide hard facts and established patterns that expose potential problems and opportunities.

Also, compare your construction business with other similar companies, especially competitors. Your accountant, bank manager, or industry association may be able to supply industry benchmarks.

What are some of the key drivers in business?

Critical drivers vary from business to business, and in construction businesses, they include:

• Sales lead in capital goods or service
• Market share where only the biggest will survive
• 'First-time fix' in a maintenance business

Even direct competitors may have different drivers. A prime location is not a key driver for a floor installation business, but it is for a brick-and-mortar competitor that relies on a well-located retail store if they sell hardwood flooring and carpet and provide installation services.

Some of the following drivers might be relevant to your business:

1. Converting leads into sales

The number of leads (information requests or quotes given) provides early warning of any peaks or downturns in your sales. If you have an established leads-to-sales conversion ratio and know the size of an average sale, you can use the pace of leads to forecast sales.

Monitoring sales figures can show:

- Which categories of products are selling well

- What each salesperson has achieved

- If lead conversion rates are improving

- Keep your costs under control

Maintaining a healthy gross profit margin is critical. If your gross margin percentage is falling, take swift corrective action. The causes could include higher input prices, a changing product mix, production inefficiencies, or excessive discounting.

If you run a service business that bills out time, it can be helpful to treat consultants' salaries as a variable rather than overhead costs because this makes it easier to work out who is making you money.

2. Collecting receivables efficiently

Your accounts receivable collection period (the number of days on average to collect customer payments) is an important driver to monitor. Try to improve your past performance and at least match the industry standard.

If the standard is 35 days, and you take 45 days on average to receive customer payments, then improve your collection activities immediately. Bill promptly and highlight overdue payments for prompt action.

The key is consistency – late payers should know that you'll unfailingly contact them.

3. Optimal inventory levels

Your inventory turnover rate is the ratio of cost-of-sales to inventory. Most businesses aim for a high inventory turnover rate because it indicates an efficient use of capital resources. If the ratio decreases, find out why.

For example, you may be overbuying or purchasing inventory you cannot sell. The more you can break down your inventory figures into separate product categories, the easier it will be to pinpoint problems.

4. Hours billed

An interior designing firm had a disappointing level of monthly sales for years until the owners realized that hours billed per consultant per week was the key driver.

Once they began monitoring this, they could see which consultants were earning the revenue. The firm could then target small and manageable improvements – such as billing 30 minutes more a day each. Attitudes changed overnight, and sales increased significantly.

5. Turning over staff

A plumbing company recognized that staff turnover was their driver. A skilled plumber with sales experience was three times more productive than a new recruit. The recruitment and training process for new salespeople also significantly burdened the business.

The plumbing company introduced a long-term incentive into salary packages to reduce staff turnover. It also introduced quarterly performance reviews.

6. Defective/Wrong goods

A painting supply and service business found that the defect ratio was a driver. Defects or wrong paint color led to goods being returned, extra time wasted on rework, delays in payment, and lower profit for the business. The company reorganized the workforce into 'quality cells,' and productivity increased significantly.

Identifying the five key drivers you need to focus on

What key factors enable your small construction business to outperform its competitors? Try to identify the five key drivers you need to focus on.

The questions you need to ask yourself are:

• What drives the sales figures?
• What drives the costs?
• What drives the cash flow?

Final thoughts

By optimizing these Key Drivers, successful contractors understand how and why the construction business cycle works. Cost is what you see; the profit potential is what you don't see. High-profit construction company owners focus on both and understand that "It Takes Money To Make Money."

Next Steps: What gets measured gets managed. After learning your key drivers, it's time to understand your reports and use them to your advantage.

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Discover insightful lessons with actionable tips for your bookkeeping processes with our Five Key Performance Indicators online course. Get your reports done with our "Five At 5 For 5" approach and improved practices.

About The Author:

Sharie DeHart, QPA, is the co-founder of Business Consulting And Accounting in Lynnwood, Washington. She is the leading expert in managing outsourced construction bookkeeping and accounting services companies and cash management accounting for small construction companies across the USA. She encourages Contractors and Construction Company Owners to stay current on their tax obligations and offers insights on managing the remaining cash flow to operate and grow their construction company sales and profits so they can put more money in the bank. Call 1-800-361-1770 or sharie@fasteasyaccounting.com

This Podcast Is Episode Number 500, And It's About Cost-Reduction Strategies For Construction Company Owners

Cutting costs can be a quick and easy way to improve the profitability of your construction business. Introducing cost-control measures can bring immediate savings and ensure you remain profitable in the long term.

But cost-control measures must be carefully managed. Eliminating errant expenses is beneficial, but indiscriminate cost-cutting could lead to a drop in quality or poor morale if staff fear being made redundant or are not given the tools they need to do their job efficiently.

This risk is heavily reduced by identifying where you can safely trim costs, setting clear cost-reduction targets, and researching any cost-saving initiatives before making changes to your contracting business.

Planning for effective cost-control

The first step towards reducing costs is identifying your major cost areas. These are likely to include:

• Production
• Purchasing
• Sales and marketing
• Financing
• Administration
• Facilities maintenance

1. Profit and Loss

Start by assessing your profit and loss statement for the last six months and rank all your expenses from highest to lowest, working your way down the list and identifying areas where you can reduce costs. It's a good idea to first focus on identifying cost-saving measures in places where you'll see the most significant return. For example, it's wise to work toward saving 5% on a $200,000 expense rather than a slightly higher percentage on a lower-cost expense.

2. Try new ideas

You might find it challenging to anticipate savings without implementing new systems and processes. Remember that any changes you make don't need to be permanent. If you aren't sure if a cost-saving measure is suitable for your business, consider trying it for a few months and then assessing the results. This way, you'll know the actual cost savings without committing long-term to new processes or changes.

Any new processes or systems should be benchmarked and frequently revisited to ensure they are still suitable for your business. Consider asking staff for feedback around any changes to confirm that no hidden problems could cost you more than the cost-saving value.

If you are in doubt about any potential changes, consider seeking professional advice from an accountant, industry association, or business mentor.

3. Quick savings

You might be surprised that significant savings can be made without worrying about your quality and affecting performance. Here are the most popular ways to trim costs without making radical changes.

• Eliminate unnecessary costs – start with waste reduction, heating costs, and utility charges.
• Reduce inefficiency by identifying manual tasks that could be computerized or completed less frequently.
• Avoid frequent, small orders that cost more than larger orders and take additional time to complete.
• Reduce travel expenses by booking air travel earlier and using cheaper accommodations on business trips.
• Find alternatives to high-priced suppliers or negotiate better payment terms or discounts on purchased goods.
• Revise your credit policies to encourage prompt payment.
• Brainstorm immediate cost savings with your staff – they might have some valuable suggestions you may have overlooked.

4. Significant savings

Once you have identified your major cost areas, you may want to investigate potential ways to save money by changing existing processes.

Some of the most common opportunities are listed below, but before adopting any changes, you should be aware of any potential damage to your core business activities.

• Cut payroll costs by outsourcing non-essential activities.
• Redesign your existing processes to eliminate duplication and cut time wastage.
• Make use of current technology or the latest industry innovation.
• Agree to long-term supply contracts, or guarantee a minimum purchase amount to secure better terms.
• Trim back or revise your current product offering and remove poor-performing products.
• Form strategic alliances with other businesses to buy larger volumes.
• Consider subletting office space or relocating to a more cost-efficient location.

There may also be other costs, such as long-term, fixed-rate business loans or fixed-price contracts for raw materials, that you may be able to reduce when these are up for renewal or tender.

Pitfalls to avoid

Reducing costs can have a negative effect, so you'll need to be sure that changes will not compromise your operational performance.

Some common pitfalls include:

• Over-dependence on one supplier could put you at risk if your supplier fails.
• Reducing your marketing budget could affect your marketing strategy.
• Tighter control of business finances could leave you without a safety margin if cash flow becomes tight.
• Cutting short-term costs such as training, research, development, or advertising can lead to long-term weaknesses.

Employee costs

Reducing employee-related costs is generally risky and counterproductive in the long term. Reducing costs such as staff training or meeting times could lead to poor staff morale and reduced productivity.

Making employees redundant could bring short-term costs and the risk of possible employment proceedings. It may also contribute to low morale. Changing an employee's terms and conditions can also create legal issues in some circumstances, so it's always a good idea to get expert advice before making a decision.

These problems can be minimized by maintaining clear communication with employees. Introducing cost-saving through improved practices and procedures will require a degree of employee 'buy-in' so your employees know why you are making changes. Employees may need additional training and support over these periods.

Next steps

• Schedule a staff meeting to review your costs and brainstorm possible saving measures.
• Commit to an ongoing cost-control and monitoring process (or delegate to key staff to manage the process).
• Ask your accountant to assist you with cost-saving initiatives or brainstorm ideas.

Final thoughts

Every small construction business owner knows how challenging it is to cut down expenses without somehow compromising internal or external quality. Regardless of your business's nature, the first step to reducing your overhead costs is to take the time to go through every single expense you have -assess which ones are necessary for your business to operate smoothly, what can be trimmed down, and what can be eliminated.

It's important not to rest on your laurels. Continually thinking of ways to reduce your overheads is essential for a healthy cash flow, so conducting regular reviews of your business expenses should be a routine task.

About The Author:

Sharie DeHart, QPA, is the co-founder of Business Consulting And Accounting in Lynnwood, Washington. She is the leading expert in managing outsourced construction bookkeeping and accounting services companies and cash management accounting for small construction companies across the USA. She encourages Contractors and Construction Company Owners to stay current on their tax obligations and offers insights on managing the remaining cash flow to operate and grow their construction company sales and profits so they can put more money in the bank. Call 1-800-361-1770 or sharie@fasteasyaccounting.com

This Podcast Is Episode Number 499, And It's About Construction Company Employee Vs. Contractor - What You Need To Know

Depending on the nature of your construction business, you may have workers who are employees or contractors, or you may have both. Each has its merits, but it's important to review which are to meet your tax obligations.

With so much discussion about employees, payroll, and payroll taxes, you may feel like missing out by not hiring many employees. The reality is that as a small business owner, you do not have to hire employees.

To hire or not to hire employees is one of the few optional things where the business owner can choose, change their mind, and change direction as needed.

When you have an employee, you must withhold income tax and report on additional benefits. Contractors generally look after their tax obligations.

Is there another way?

Yes - to outsource most of the mundane low-value tasks that take time away from what you are skilled in. As the owner, you can use that time to meet with clients, create estimates, collect money, pay bills, and have a little left over.

It's against the law to treat an employee as a contractor. Significant penalties apply if you do, so it's essential to get it right.

The simplest way to remember is:

An employee works in your business and is part of your business.

A contractor is running their own business.

But how can you be sure that you've got an employee or a contractor on your hands, especially with remote work blurring the lines between employees and contractors?

Does it come to the point that you should be hiring a worker as an employee when you thought they were a contractor?

There are six factors to consider:

1. Ability to subcontract or delegate

An employee is not able to subcontract or delegate the work. They must perform the outlined tasks themselves. If they can't do the work themselves for any reason, say a prolonged illness, and someone else does it, this is a substitution. Your business would then pay the other person to carry out those activities.

A contractor can delegate the work as long as they're not obligated to do it themselves per the contract. If your contractor didn't work, they would arrange for another qualified person to do it. You would pay your contractor, who would then pay their subcontractor.

2. Basis of payment

An employee is paid a set amount per period. The most obvious example would be an annual salary or hourly wage.

Some employees are paid piece-work rates. They receive an amount per successful sale or per the number of pieces produced. A commission basis would be a price-per-item structure.

A contractor, however, is paid an agreed-upon price in exchange for a predetermined result. Some contracts may specify the amount to be paid in increments as stages of the project are completed. But the key takeaway is that a contractor is paid when the agreed-upon result is achieved.

3. Equipment, tools, and other assets

If your business is responsible for providing the equipment, tools, and other assets required to perform the job, that's characteristic of an employee.

If the worker is providing these items, they are likely a contractor.

4. Commercial risks

Employees do not bear the commercial risk and are not liable for correcting any defects in the work at their own expense. Instead, your business takes this responsibility. The worker will be paid for the time required to complete the task.

A contractor assumes commercial risk. They are responsible for fixing any mistakes on their own time. Your business does not have to pay for any extra time taken or materials used unless otherwise specified in the contract. This additional work would fall under the umbrella of the terms set at the beginning of the project.

5. Control over the work

Employees have to complete the work the way the employer specifies. What work is done, where it's done, how it's done, and when it's done are all up to the employer. The employee then completes the work as required.

Contractors are not subject to the same rules. They decide when and how the work is done, so long as it meets the obligations laid out in the contract. For example, a contractor could work three 10-hour days rather than four 8-hour days to complete a job.

6. Independence

An employee works within a business. They complete tasks as required until they leave the job.

A contractor operates independently and may have other contracts with other companies. They can freely accept and refuse other work. Their obligation is complete when they deliver the specified outcome.

Final thoughts

Don't add staff just to have staff. Employees are expensive. In Washington State, it is mandatory to offer Family Leave and PTO. Family Leave is similar to State Unemployment which is calculated on gross wages. PTO (Personal Time Off) is at a rate of 1 hour per every 40 worked. The employee can use the time off anytime they want – no notice given) Other benefits may include paid vacation and holidays.

Most construction company owners like you are doing what they can to survive and thrive in tough economic times, and we are here to support and hopefully help you stay out of trouble where we can.

It can be confusing to determine between an employee and a contractor, but it's crucial that you do so to meet your tax obligations and play by the rules. Contact us to learn more about your tax obligations for employees and contractors.

P.S.

Here's a Promo Code that you can use in both our Fast Easy Accounting Store and Construction Accounting Academy for a 40% Discount:

CONTRACTOR40

You can use it today, November 25, up to Sunday, November 27, 2022, at 11:59 PM. (Please note: Offer does not apply to Outsourced Accounting, Bookkeeping Review, or any Consultation and Training products; you can use it, however, to purchase any course or monthly subscription classes in Construction Accounting Academy).

For questions, suggestions, or comments, email me at sharie@fasteasyaccounting.com or call me at 800-361-1770 or 206-361-3950.

I look forward to helping you with your business goals.

About The Author:

Sharie DeHart, QPA, is the co-founder of Business Consulting And Accounting in Lynnwood, Washington. She is the leading expert in managing outsourced construction bookkeeping and accounting services companies and cash management accounting for small construction companies across the USA. She encourages Contractors and Construction Company Owners to stay current on their tax obligations and offers insights on managing the remaining cash flow to operate and grow their construction company sales and profits so they can put more money in the bank. Call 1-800-361-1770 or sharie@fasteasyaccounting.com

This Podcast Is Episode Number 498, And It's About The Solution To Your Construction Company Equipment Dilemma

Is it time for your construction business to invest in some new equipment? And if so, is it a more brilliant business decision and cost-effective to rent or buy?

Black Friday, followed by Cyber Monday, is coming. The real question is what equipment is on your business shopping list. It is all a question of your budget, income, cash flow, profit & loss, and taxes.

Why you might need new equipment:

• The right equipment can enhance your processes, productivity, innovation capacity, and bottom line, but should you buy now or wait till a later date?
• A few reasons you might need to purchase new equipment now are because:
  - You have some big contracts coming up and need to increase production.
  - Your construction business is expanding at a fast rate.
  - You need to replace some aging equipment to maintain your business’s high standards and keep up with the competition.

Evaluate your existing financial state

It can be easy to get caught up in the growth of your business without putting the necessary time into assessing whether you’re financially ready to buy some more equipment.

Try to look beyond your current situation to project your costs over the coming months or years (depending on whether you plan to hire or buy).

You can reduce the financial impact on your business by:

• Using financing to buy the equipment – you may even get lower rates than hiring the asset, and after you complete your payments, you’ll own it.
• Purchasing quality used equipment could be more cost-effective than renting over the long term.
• Examine your business as a whole

Short-term purchases without long-term plans can be costly

Consider these questions when drawing up plans to invest in more equipment:

• What effect will the new equipment have on your human resources?
• Will you need additional staff or relocate staff elsewhere throughout your business?
• Can the equipment you’re replacing be used elsewhere in your business?

The length of the job or project

A crucial deciding factor as to whether the right time to purchase more equipment is now is the length of an upcoming project (or the frequency of extra jobs coming up).

Additional short-term work suggests hiring would be a better option. Likewise, if you need a highly specialized (and expensive) piece of equipment, it might be preferable to hire it.

It makes more sense to buy for longer-term projects. Hire costs can add up quickly as a job gets delayed and pushes past its expected finish date.

Usage and availability

Knowing that the right equipment is available to your business whenever needed is a significant advantage. If anything unexpected happens with a job, you’ll have the necessary equipment to react and reschedule.

Potential clients will also notice that you own the equipment necessary to complete their requests, helping develop trust with your business.

When you decide whether to hire or buy, consider the risk of your preferred hire company not having the equipment you want when you need it.

Deciding to hire or buy

You can get the new equipment you need by renting (hiring) or buying. Each has advantages and disadvantages, so it’s worthwhile assessing your business’s current financial situation, its current capabilities, and its plans (for growth).

Weigh up the pros

If you choose to purchase new equipment, the advantages over hiring will include the following:

Availability – you can be sure the equipment will be available when needed.

Ownership – you own the equipment and can potentially get a return on it when you sell it.

Additional financing – if using a loan to pay for your equipment, you might be able to get extra funding to cover transport, training, or installation.

If you decide to rent the equipment, the pros include the following:

Cost – smaller initial investment

Maintenance – the lender, should handle insurance and maintenance.

Technology – you can usually hire the latest equipment available and should be able to upgrade as your project progresses.

Will renting make your life easier in the short run while you consider buying at a later date? Will buying now be more beneficial to your business over the longer term?

On the accounting side:

If you buy before - the end of the year – the Internal Revenue Code – Section 179 allows for accelerated depreciation. If your purchase is less than $500.00, it is always a qualified expense.

The bigger stuff is Vehicles / Tools Mounted On A Trailer / Generator / Specialty Equipment.

Depending on type - Life span and cost basis can trigger other tax reporting rules. Section 179 accelerated depreciation has been in place for many years.

Three reasons the 179 accelerated depreciation went into effect:

Stimulate the local economy – some purchases, such as QuickBooks, are purchased at local stores.

Give the business a reason to grow and expand by adding new equipment and additional employees.

Useful life ended long before the depreciation schedule ended years later.

Everything comes back to two issues - Taxes and Cash Flow

• If you have the cash or can finance, do you need to buy a piece of equipment for the field?
• If you have the cash or can finance, do you need to buy a piece of equipment or software for the office?
• From an operations viewpoint - If you purchase either now, can you use it to make or save money?

It’s easy to assume that the deduction will always be available. Congress decides what changes year over year in the details of the deductions. At one point (several years ago), vehicles over a certain weight (SUVs) had a cap on the depreciation deduction. They were considered luxury vehicles, and the extra features were unnecessary over the basic pickup truck.

Summary

A wheelbarrow and a shovel are cheaper but would a small Hitachi be more productive and cost less in the long run, which could give you more money to operate and grow your construction business?

Taking into account the points above, you’ll get a clearer idea about whether now is the right time for you to purchase more equipment, either with your capital or through financing, or whether it’s a better option to hire for the time being.

Next steps

Talk to your accountant to discuss the pros and cons of hiring and buying new equipment.

Have a word with your bank manager about whether you can get funding to purchase the equipment your business needs.

Reach out to me; I'm ready when you are.

About The Author:

Sharie DeHart, QPA, is the co-founder of Business Consulting And Accounting in Lynnwood, Washington. She is the leading expert in managing outsourced construction bookkeeping and accounting services companies and cash management accounting for small construction companies across the USA. She encourages Contractors and Construction Company Owners to stay current on their tax obligations and offers insights on managing the remaining cash flow to operate and grow their construction company sales and profits to put more money in the bank. Call 1-800-361-1770 or sharie@fasteasyaccounting.com

This Podcast Is Episode Number 497, And It's About A Guide To Construction Client Retention

Long-standing customers form the backbone of a robust and well-established business. Make it your mission to ensure that most of your current customers stay with your company for many years.

Understanding the High-Profit Client

Most of them have personality traits commonly known as drivers. Folks accustomed to getting things done quickly and efficiently do not mind paying professionals for servicing, repairing, remodeling, or building new construction projects related to their houses and commercial buildings.

Why it's vital to keep existing customers

Your current customers already have personal experiences dealing with your business and using its services. You won't need to spend much time, money, and energy convincing them to continue hiring you.

You and your staff know your current clients well. They're likely to increase the amount (or the frequency) of their purchases and recommend your business to others if you:

• Solve their problems.
• Meet their needs.
• Exceed their expectations.

According to the US Chartered Institute of Marketing, it costs between four and ten times more to win a new customer than to keep a current customer. Therefore, it's vital to implement outstanding client service to convert occasional customers into loyal, long-standing regulars.

1. Communicate consistently and manage expectations

• Let your clients know what they can expect from your business, including timescales.
• Ensure emails are clear
• Your loyal clients deserve communications that are more personal and less formal. Using impersonal emails for your more extensive email list is fine, but use more personal touches with your best customers.

2. Show your customers you appreciate them

You can show your customers you appreciate them in many different ways, including:

• Thank them personally for hiring you. The more special your clients feel, the more likely they will hire you again. They'll appreciate your thoughtfulness and value your service.
• Offer your long-term customers bonuses for their loyalty. Giving them a voucher, so they save money the next time. Or a voucher for someone they know who needs your service. It's great to offer new customers rewards and incentives, but that leaves existing customers feeling ignored.

3. Develop customer service standards

Develop customer service standards for your business. You could use some of the following guidelines for your business's customer service standards. Try to:

• Be polite, helpful, and friendly to your clients at all times.
• Respond to emails as quickly as possible, preferably within three hours but within a maximum of 24 hours.
• Listen carefully to questions and requests so that you can offer the most appropriate help or advice.
• Inform customers immediately if there's an unexpected delay in processing their requests or implementing change orders.
• Train your crew in customer service - everyone in your business who will contact customers should be trained in customer service.
• Use your business's customer service standards as a basis for your training. Ensure staff knows precisely what's expected of them when interacting with clients.

4. Deal with customer complaints effectively

Regard each customer complaint as an opportunity rather than an annoyance. This allows you to handle the complaint satisfactorily. If a customer complains, it shows they still care.

Steps to take when a customer complains

• Train your staff members to take several steps whenever a customer complains. They should:

Listen carefully to what the customer is saying. Understand exactly what they're complaining about and why.

Admit any mistakes that your business has made and apologize to the customer.

Make amends quickly. If necessary, ask the customer what they would like you to do to remedy the situation.

Promise to do better next time.

• Test and improve your business's customer service

There are several ways to find out how well your staff is handling their customer service duties, including:

Asking customers for feedback on how your business could improve its customer services.

Inviting your staff to suggest how your business could treat its customers better.

Use all these ideas to develop and extend your customer service skills. Ensure each employee has ongoing training.

5. Exceed customer expectations

Ways you can exceed your customers' expectations include:

• Delivering an excellent product or service. You'll keep customers for life if you exceed their expectations.
• Responding quickly to all customer questions, requests, complaints, and other communications.
• Training all your staff in excellent customer service skills.
• Managing all aspects of a transaction efficiently, from the sale to the delivery to invoicing.
• Dealing with complaints quickly and effectively.
• Delivering on your promises. Never promise anything that your business can't provide.

Final thoughts

Build relationships with clients and take time to learn more about them. Recommend solutions that address their specific problems. Go the extra mile to show your customers they're important to you. Ask for their input, as well. They'll get to know your products and services and offer insights into what's working and what could be improved. If you engage them--and make changes based on their feedback--you'll develop a loyal customer base.

Encouraging repeat customers makes solid business sense. It's far less expensive to keep an existing customer than to win a new customer. Recognize the value of your customer base and invest in building an exceptional customer experience that will ensure your customers return for many years to come.

About The Author:

Sharie DeHart, QPA, is the co-founder of Business Consulting And Accounting in Lynnwood, Washington. She is the leading expert in managing outsourced construction bookkeeping and accounting services companies and cash management accounting for small construction companies across the USA. She encourages Contractors and Construction Company Owners to stay current on their tax obligations and offers insights on managing the remaining cash flow to operate and grow their construction company sales and profits so they can put more money in the bank. Call 1-800-361-1770 or sharie@fasteasyaccounting.com

This Podcast Is Episode Number 496, And It's About Managing Payment Terms For Your Construction Business Clients

Getting paid correctly and on time by customers can be a constant frustration for business owners. Communicating your terms is the best way to ensure you aren't out of pocket – or are left chasing debtors.

Investors, developers, and shrewd business people designed the most popular method - those who understand the concept of divide and conquer - it is when contractors get little or no down payment for a construction project, do all the work, including change orders, and then try to collect their money.

What often happens is that contractors hate paperwork preferring to keep everything in their heads. Then when it comes time to collect their money, they have to re-sell the job and talk their customer into parting with their money.

Contractors who finance working capital with their own money and whatever they can borrow will earn less profit and put themselves at a higher risk of failure than contractors who use Other People's Money (O.P.M.).

The importance of setting your terms of payment

Your payment terms let clients know when and how you expect to be paid. Setting your terms and letting your customers know your expectations gives you better control over your business and a valuable platform for resolving potential payment issues.

Remove barriers to sale

Setting payment terms shouldn't discourage regular or new customers from doing business with you – there are advantages to giving clients several options.

Encourage clients to hire your services and remove barriers to the sale by making the purchase as easy as possible through a variety of ways to pay, including:

• Mobile payment options.
• Cash or check.
• Bank deposit.
• Online money transfers to your bank account
• Debit or credit card payment.

Take the time to become familiar with all these options and their relative pros and cons.

You might, for example, decide to accept only major credit cards, offer a discount for cash, or give your staff leeway to negotiate cash discounts if customers request this.

Know your industry's norms

It's worth researching your industry's generally accepted payment terms and terms competitors use. This doesn't mean you have to follow suit. You may be able to spot a gap or opportunity to be more flexible. The following examples could build a competitive edge:

• Feature more payment options than most competitors.
• Provide quicker and easier ways to pay.
• Offer a discount for cash deals that give you immediate cash flow and protect you from credit payment defaults.
• Offer longer payment terms in return for a slightly higher price.
• Investigate faster and more convenient ways to pay using the latest smartphone technology.
• Offer variations for payment

There are numerous terms you can set out for your customers to pay. Sometimes it's best to use a method that works for you both.

Payment in advance

Some businesses, such as those operating over eBay or other auction sites, require payment in advance to protect against possible online fraud.

Customers first pay the purchase price (including shipping costs). You then wait for the payment to clear before supplying your services.

Although this might not work for your type of business, still be wary of relying on a bank deposit or email confirmation not sent directly from the depositing bank as proof of payment.

Progress payments

These can be useful when working on a lengthy project, such as building a house or a massive remodeling project.

Progress payments serve two critical purposes:

1. They provide a regular cash flow to pay running costs.

2. They protect you against total loss if your client goes bust.

Standard practice is to build progress payments into contracts based on measurable milestones.

Early payment discounts

Early payment discounts can encourage people to pay on time. They're more useful on higher-margin services as the deal will have less impact on your profits than thin-margin products.

For example, if you offer clients 60 days of credit, consider a 5% discount for payment within 30 days.

Some clients will try to claim discounts after the due date. If you don't stick to them, your customers won't either. It's in your interests to politely but firmly point out your terms of trade.

Contracts and debit orders

Businesses that offer regular services, such as plumbing maintenance, can benefit from offering customers a set annual (or longer) contract. The attraction for the customer is a price that's typically lower than paying for each visit or service.

Requiring the client to set up a debit order eliminates time chasing payments. Spreading the cost over 12 monthly payments can also make it easier for them to manage their budgets. Meanwhile, your business benefits from a regular cash flow.

Selling on credit

Selling on credit terms can expose your business to delayed payments or outright loss, affecting your cash flow. Some rules to help you include:

• Developing or adapting a credit application form – your bank manager can help.
• Asking customers for business references and permission to do a credit check.
• Setting agreed on credit limits.
• Clarifying your payment terms – 30 days or 60 days are the most common.
• Explain any interest charges you'll impose on late payments.
• Getting your customer to sign acceptance of these conditions to prevent future arguments.
• Monitoring any overdue payments or orders that will breach agreed credit limits.

Choosing your payment terms

By now, you'll have a sure idea of payment terms that could suit your business. Run your choices past your accountant, bank manager, and lawyer for their input.

Remember that your terms should attract clients, not turn them away. You might lose sales if you don't accept credit cards or add a surcharge for credit card payments. In this case, weigh the extra costs of accepting credit card payments against the business you might otherwise lose. It's your decision.

Communicate your terms to customers

Whatever your payment terms are, clearly communicate these in your terms of trade, website, and business materials.

Final thoughts

There are many accounting and invoicing software platforms and invoice templates out there that you can use. As a reminder, billing your clients depends on your signed contract, and sending invoices is based on this agreement's details. Again we recommend you hire a reasonable construction attorney and have that person write your contracts. Depending on your business needs, we can always help a little or a lot.

About The Author:

Sharie DeHart, QPA, is the co-founder of Business Consulting And Accounting in Lynnwood, Washington. She is the leading expert in managing outsourced construction bookkeeping and accounting services companies and cash management accounting for small construction companies across the USA. She encourages Contractors and Construction Company Owners to stay current on their tax obligations and offers insights on managing the remaining cash flow to operate and grow their construction company sales and profits to put more money in the bank. Call 1-800-361-1770 or sharie@fasteasyaccounting.com

This Podcast Is Episode Number 495, And It's About The Common Construction Payroll Implementation Errors You Can Easily Avoid

Small business owners spend an average of eight hours monthly performing payroll functions. That's 12 business days a year that could be spent generating sales, prospecting new business opportunities, improving products or services, or servicing customers.

Upgrading or changing your payroll system comes with a ton of attractive benefits. Saving time and money, making everyone's account more manageable, and better integration are all excellent reasons to consider a change.

But if the switch is mishandled, the results can be catastrophic and lead to long-lasting problems. Read on for tips on avoiding a disastrous payroll system migration.

1. Give the project the time it needs

People may indeed enjoy coming to work. But for most people, earning money is the main reason they seek employment. Our jobs make the world go round and support our families and us so that we can afford everything else.

Not getting paid, or getting paid incorrectly, is a massive problem for your employees. As a business owner, you want to ensure your employees are paid right and on time. This protects your business, but it also protects their happiness.

Changing payroll systems is a huge undertaking. There are many moving parts and people who will be affected. Make sure to give this project the time and attention it deserves.

Determine what will be necessary to make the transition, understand whom it affects, and communicate with everyone involved. The planning process is critical. Treat it as the foundation for making the switch, and the rest will fall into place.

2. Map out integrations

All payroll software will do the basics, but that's just the beginning of your new system. Learn about what other software will integrate with your new platform. Do your research for what add-ons you will need, and build accordingly.

Your new system will be able to connect with HR software, advanced accounting functions, time-tracking tools, and so much more. Envision what your complete system looks like and understand how to get it to all work together.

When you have the complete picture from the planning stage, it will make the transition a lot smoother.

3. Adjust the platform to your needs

The primary motivation for implementing a new payroll system is to make things easier. Yet, many businesses overlook the ways that their new technology can help. It's easy to lean on old methods for getting things done because they're familiar, but that would be a mistake when switching to a new payroll system.

Make sure you know about and understand the features of your new platform. This is where the real-time, money, and energy savings will come in. Automate anything you can. When these tools prove their worth, your team will understand the reason for switching.

4. Don't bring over insufficient data

When implementing or switching to a new system, take the opportunity to go over your incoming data. Yes, all of it. Get rid of what you don't need while keeping in mind what you have to keep on hand according to any relevant tax agencies.

While payroll software is beneficial, it can only do so much. If you put insufficient data in, it will spit bad data out. Go over the information you're inputting with a fine-toothed comb to get the best result.

5. Test, test, test

Before you officially implement anything, make sure to test it out. This phase is critical and is often overlooked. There's no quicker way to turn your staff off of something new than for it to work poorly or not right out of the gate. Take the time to test now and reap the benefits when you go live.

A Better Approach

If you think hiring a full-time in-house payroll staff is not practical, you can always come to us and let us take care of your payroll. Whether you need weekly, fortnightly, or monthly processing, our team is flexible enough to do it for you.

When contractors ask which payroll option we recommend, we often say Direct Deposit. As usual, the reasons are simple and related to our primary role as "Profit And Growth Specialists For Contractors" and our mission, which helps you - the people of the most significant industry on earth - the construction industry, to achieve your definition of success.

Option 1 - Paper check looks like the least expensive. Calculate payroll, handwrite or print a paycheck, and hand it to your employee.

What is the first thing an employee does after getting a paper paycheck? They go to the bank, or the check cashing store and get cash!

If they are paid for travel time to and from the job site, they will typically cash their paycheck to the job site or take a break as soon as the bank opens. Considering this scenario, there are three costs to consider:

#1 Travel Time - It will take ten minutes to detour to and from the bank or payday advance company, plus ten minutes inside the building.

For example, you pay your employee $25.00 per hour, which means every ten minutes of doing personal business on company time costs you $5.94, multiplied by three equals $17.82. If your company earns 10% Net Profit, you need to sell another $178.20 worth of work to compensate for your loss.

If there is more than one worker in the company vehicle, multiply everything by that number.

#2 Cost Per Mile - To operate the company vehicle, which varies depending on the type of vehicles your company uses. Generally, the numbers range from $1.25 to $1.75 per mile. This considers Fuel + Insurance + Repairs + Maintenance + Registration + License divided by the number of miles driven. In this example, we estimate a three-mile detour at the middle range of $1.50 per mile = $4.50

#3 Delays On The Job - In construction, you deal with project-based systems, not operations or manufacturing-based operations. Every additional day you have to mobilize and de-mobilize costs you money. For example, if it takes (15) minutes for (4) workers to get set up in the morning and the same amount of time at night, your total costs could be $121.92.

Total cost for paper checks - between $15.00 and $50.00 per employee. To get the actual results for your company, some analysis would need to be run, or you would look in your Business Process Management System (BPM) for the answers.

Option 2 - Direct deposit could cost an additional $5.00 per payroll and $0.99 per deposit. Direct deposit drops into your employee's bank account one minute after midnight on the day payroll is due. Having a Professional Bookkeeper prepare the payroll is less with direct deposit because of the time saved in making and printing the paper checks, setting them aside for you to sign them, stuffing them in the envelopes, and taking time to pass them out.

Option 3 - Debit Card is similar to a direct deposit. The difference is that the employee does not need a checking account.

Final thoughts

Deciding to change your payroll system is a big undertaking. But some planning and preparation can be a smooth and rewarding transition.

As payroll experts in the construction industry, we can keep your employees happy with timely and accurate wages, maintain tax compliance, and significantly ease your back office burden.

So get in touch with me today if you'd like to learn more about how we can help make payroll easier for you. Give yourself the peace of mind you deserve!

We help a little or a lot, depending on your needs. I look forward to being able to assist you with any option that best fits your company.

Please feel free to download all the Free Forms and Resources that you find useful for your business.

About The Author:

Sharie DeHart, QPA, is the co-founder of Business Consulting And Accounting in Lynnwood, Washington. She is the leading expert in managing outsourced construction bookkeeping and accounting services companies and cash management accounting for small construction companies across the USA. She encourages Contractors and Construction Company Owners to stay current on their tax obligations and offers insights on managing the remaining cash flow to operate and grow their construction company sales and profits to put more money in the bank. Call 206-361-3950 or sharie@fasteasyaccounting.com

This Podcast Is Episode Number 494, And It's About The Five Signs You Need To Start Outsourcing Your Administrative Tasks

When you start a small business, it's usually only you behind the whole operation. You wear many hats, from CEO to clean-up crew. As you pour your heart and soul into your business and it begins to grow, the amount of work involved grows.

Because a small business focuses on survival, you pay much attention to the bottom line. This makes much sense, but it also leads to being seriously overworked.

These days, contractors are under increased pressure to cut their prices to get enough work. And that means they need to reduce costs. New technologies and approaches in cloud computing for construction accounting give forward-thinking contractors a fantastic ability to get more for less -but in most cases, contractors' heads are still stuck in 1990, thinking they have to do everything themselves.

There will inevitably come a time when you must consider letting go of some control and paying others to take some things off your plate. Here are five signs that it's time for you to start outsourcing tasks:

1. You're overwhelmed and stressed

This one's a dead giveaway. If you find that there isn't enough time in the day, you're losing sleep, free time is a thing of the past, and you're not your usual self — you've reached burnout. This is not a sustainable place, and it would be wise to start offloading some activities ASAP.

2. You're spending time doing things you hate

Nobody goes into business hoping to spend their days completing tasks they despise. It starts with a dream or an idea for how to make things better. Or even an idea for how to make more money. Whatever the reasons you had for starting your construction business, they likely did not include doing tedious chores that you don't enjoy.

When you decide to outsource, start with functions that are eating up your time in an unenjoyable way. Once you let these go, you'll find your purpose renewed because you can focus on what you love about your business to begin with.

3. Quality of work has gone down

When you're working hard and trying to manage all aspects of your business, it can be easy to miss this sign that you're not juggling it as well as you thought. The first signs often come from a client complaint, like delivering a lower-quality product or missing something in your services.

When the quality of your work declines, it's time to hire some help. If you do not satisfy your customers, your business will begin to suffer – and then you won't need the extra support because there won't be a business to run.

4. No time to grow

If you want your construction company to grow, you need time to plan for it. If you're getting by and unable to plan your next steps, you need to outsource some tasks. When you find that you're barely holding it together to get everything done and there's no time for anything else, get help. No business gets to the next level by completing the bare minimum.

5. No personal time

When your work life is taking over your personal life, it's time to enlist some help. It isn't sustainable to work so hard that you have no time for family, friends, or enjoyable pursuits.

Did you get into business so you could work 16 hours a day, seven days a week? Probably not, but you may find yourself doing that for weeks and even months at a time. You might save a bit of money, but you will also exacerbate your stress and miss out on the enjoyable parts of life.

If that's the case, you're going to burn out. It's time to get some help.

Outsource Your Construction Bookkeeping

Anything not related to your core construction business is an outsourcing candidate.

When I say, "outsource your contractor's bookkeeping," I do not mean turn it all over to us or any other contractor's bookkeeping service because this never seems to work out well. No, I'm talking about outsourcing specific bookkeeping services related to data entry, bills, payroll processing, and preparing Quarterly Tax Returns.

It is crucial that you keep control of your money. Outsourcing a contractor's bookkeeping is one of the ways to avoid bookkeeper embezzlement. Never, ever let an outsider pay the bills, print checks, and authorize payment for payroll or any tax payments.

I suggest looking at every part of your internal contractor bookkeeping service and asking yourself a simple question: is this a unique and critical part of our construction company, and is it something that only we do? If so, it stays in-house and needs the brightest minds you have working on it. If not, it is a candidate for outsourcing, and you need to look at it more closely.

Outsourcing a competent construction bookkeeper is a sound business decision as it gives you access to expertise and guidance you might not otherwise have, and it frees up your time and money to take advantage of other business opportunities.

Final thoughts

As non-employee, we can give helpful, honest advice on improving your procedures and overall efficiency. Most employees want to fill their time and are resistant to change. Outsourcing your construction bookkeeping to us means you can pick and choose what services you want. We will work within your budget, so there are no surprises.

It's a problematic mindset shift for an entrepreneur who has spent all their time trying to save and earn as much as possible. But needing to outsource your tasks is a sign of success. When you take the leap and hire someone to share the burden, you will be pleasantly surprised by the many ways that it pays off.

About The Author:

Sharie DeHart, QPA, is the co-founder of Business Consulting And Accounting in Lynnwood, Washington. She is the leading expert in managing outsourced construction bookkeeping and accounting services companies and cash management accounting for small construction companies across the USA. She encourages Contractors and Construction Company Owners to stay current on their tax obligations and offers insights on managing the remaining cash flow to operate and grow their construction company sales and profits to put more money in the bank. Call 1-800-361-1770 or sharie@fasteasyaccounting.com

This Podcast Is Episode Number 493, And It's About Management Priorities For New And Experienced Construction Company

In the past, Construction Project Managers were laborers or served an apprenticeship in one of the skilled construction trades and were promoted to foreman. This meant many people were more comfortable in manual labor without management skills. And when "things" were put in charge of "people," the results were not usually favorable.

Because of this, many construction companies failed and went out of business due to the Cost of Chaos in their businesses. And it is still happening today.

In the late 20th century, construction and construction management were separated into individual disciplines, each with its methodologies, terms, and definitions.

Project Management Institute developed a set of standards and guidelines, including a glossary of terms to make it possible for construction project managers worldwide to have a common language to communicate.

In today's construction business world, there is a need for excellent project management. Highly skilled and qualified Construction Project Managers on your payroll can provide your company with another competitive advantage over your competition which could be like having a money tree in your backyard. As a result, you can put more money in the bank to operate and grow your construction business.

Whether you just started your construction business and are a one-person company (just looking to hire a subcontractor for other parts of your project) or a weathered construction company owner looking to regain skills to operate your business confidently, it is essential to prioritize these management guidelines:

1. Put together a solid advisory team

Starting a business and owning a construction business can be a lonely process, and thinking you can do it all yourself is the road to extra stress and pressure. Study successful business owners, and you'll find they have surrounded themselves with a strong group of advisers.

A typical core team would include an accountant, a lawyer, a banker, and a mentor, such as an experienced business person you admire. You can then add experts who can give you quality advice on specialist areas where you may lack skills, such as finance, production, marketing, or technology.

2. Choose the proper business structure – with advice

Should you start as a sole proprietor, a limited liability company, a partnership, or something else? Get advice, as each structure involves legal, regulatory, and tax issues.

Think beyond this year. Which structure will carry the most credibility with customers? What's the best system for expanding the business or taking in partners? What form would best suit future investors? Think also of succession – one day, you will want to sell or pass on the business to family, staff, or an outside buyer.

3. Sort out all compliance requirements

You don't want to be distracted by compliance issues once you're in business.

List everything you need to sort out now, from health and safety issues to permits and consents required from Federal, State, or local authorities. If you're starting a business from home, do you need permission? Will your business involve hazardous activities, noise, or toxic chemicals? If so, what licenses do you need, and what health and safety measures do you need to take?

What taxes do you have to pay, and when? What is a sound system for getting this done, so you don't miss any payments or incur penalties?

Make a checklist and work systematically through it with help from your advisers.

4. Set up well-built systems

Good business is all about substantial systems. To run your business well, you need efficient processes.

Time spent setting up simple but effective systems will pay off handsomely. Think about everything from production and work processes to service and billing. With good strategies, you can:

• Run the business more efficiently and delegate more confidently.
• Deliver efficient and consistent quality in products, services, and customer delivery.
• Train new staff more quickly if they have clear operating manuals to follow.
• Delegate or take time off with more confidence that others can follow operating manuals.
• Add value to your business in the eyes of a future buyer.
• Build the foundation you will need to future-proof your business.

5. Develop good credit management

You need a fast, efficient, consistent credit management process if you sell on credit. As a new business, you need the money owed to you as soon as possible to pay bills and lower your interest costs. Never let things slide, or some customers will treat you as a source of cheap finance. Key points:

• Check the credit standing of all new customers, even though you may be eager for their business.
• Make sure customers understand your terms of trade and sign an agreement with them.
• Set credit limits and a system to flag orders exceeding the agreed credit limit.
• Bill promptly and send statements out on time.
• Follow up on late payers immediately. Late payers must know you're always on their case. In order of effectivity, visit them, call them, or email them.

6. Deploy an exceptional accounting system

You need timely information to make the right business decisions. Get help from your accountant to set up an easy-to-operate accounting system.

A correctly set up construction accounting system should allow you to:

• Automatically download and categorize bank statement details, saving time and eliminating manual data entry errors.
• Generate instant profit and loss, budget, and other financial reports.
• View a quick dashboard summary of business performance.
• Bill customers, track payments, and flag overdue payments for your attention.
• Keep your cash flow position updated so you can update your forecasts.
• If you choose a cloud solution, you and your accountant get the added benefit of being able to access the information from any internet connection.

7. Identify and monitor your key drivers (KPIs)

Some Key Performance Indicators (KPIs), such as gross profit and net profit margins, are common to all businesses. But each company also has KPIs specific to its types, such as production units for a manufacturer, conversion rate of visitors into sales for a retailer, or billable hours per week for a service business like yours.

Get help from your financial advisor or accountant to identify the core drivers for your type of business. Then monitor them closely and set improvement goals.

Monitoring your KPIs will help you grow your business and show other stakeholders, such as lenders and investors, that you have your finger on the living pulse of your business.

8. Build good relationships with stakeholders

In addition to customers, lenders, investors, and suppliers are also important stakeholders in your business. Make a point of developing good relationships with all of them. As well as enhancing your business experience, good relationships will pay off handsomely in tough times.

Paying suppliers on time will develop a relationship you can draw on later to negotiate more acceptable payment terms if times get tough. Showing you have good money skills and can forecast cash flow crunches well in advance will build the confidence of your lenders and investors.

If necessary, learn what you don't know, such as financial management basics or construction bookkeeping and accounting.

Final thoughts

Too many construction businesses fail because the owner has not established efficient management systems. This typically happens because the construction company owner is so caught up in the day-to-day operations that the fundamentals of proper business management get forgotten. Often too, it must be said that the owner doesn't like bookkeeping or other administrative tasks, so these get put on the back burner.

The whole point about putting in sound systems is that they free you to spend more time working ON your business, not in it. Having weak systems is the road to stress and burnout. On the other hand, solid business systems will enable you to work smarter, not harder.

We help a little or a lot, depending on your needs. I look forward to being able to assist you with any option that best fits your company.

Please feel free to download all the Free Forms and Resources that you find useful for your business.

About The Author:

Sharie DeHart, QPA, is the co-founder of Business Consulting And Accounting in Lynnwood, Washington. She is the leading expert in managing outsourced construction bookkeeping and accounting services companies and cash management accounting for small construction companies across the USA. She encourages Contractors and Construction Company Owners to stay current on their tax obligations and offers insights on managing the remaining cash flow to operate and grow their construction company sales and profits to put more money in the bank. Call 206-361-3950 or sharie@fasteasyaccounting.com

This Podcast Is Episode Number 492, And It's About The Top Construction Company Marketing Blueprint

Construction contractors like you are primarily in the "Hurry Up" and "Wait" zone.

• • Hurry up and answer the call from the customer.
  • Wait to make the appointment.
  • Hurry up and get to the job.
  • Wait for the customer to come home, to be available.
  • Hurry up and create the proposal.
  • Wait for a decision.
  • When the client says "Yes," it is - wait for the Job Deposit.
  • Wait to Start The Job

This Hurry Up and Wait for activity makes it hard for the contractor to schedule other jobs. Many contractors only hold a place open for the client once a job deposit has been received.

Unless your construction company has lots of work stacked up, there will be times when there is nothing to do, and that is the best time to think about Strategic Marketing and following the adage:

"Dig your well before you are thirsty"

You won't build a loyal client base if you can't earn your visitors' trust, which is why companies value social proof highly. Proving your construction business's value online takes a unique skill set, but boosting it during your downtime is a great practice.

While waiting for something to happen, here are a few strategies that can help you generate leads:

1. Build credibility quickly

Just started? Why should people hire a new business? Your first challenge is quickly overcoming their doubts by building trust and credibility. Some tips:

• Promote your skills and experience, plus those of your staff and associates.
• Join your industry or professional organization and start building a profile.
• Commission a writer to produce articles using your ideas.
• Feature customer feedback and projects completed on your website.
• Gain a market foothold by offering a service or product at less than full price in return for an endorsement you can use. (Regard this as an advertising expense.)

2. Focus on solving pain points

Identify and then focus sharply on solving the customer's challenge, whether it is a problem, a desire, or a fear.

Be specific and monetize your solution if possible. Try building a story around your service that the customer can relate to. For example, how much does double glazing save an average house in heating costs? Wrap the story of the saving around other payoffs, like a more comfortable and healthy living experience – warmer in winter, cooler in summer.

Service businesses often have a reputation for being late. If you offer services, can you guarantee to arrive on time? Look for the 'hidden' pain points in your industry.

3. Promote your point of difference

Boil down your client solutions into a compelling point of difference that will overcome customer hesitation. Refine this competitive advantage into a memorable slogan or a few short sentences at most. Run the result past your advisers and some small business owners. Once they approve, vigorously promote your point of difference on your website and in all your marketing material. Make sure staff can also confidently communicate it to customers.

4. Develop a strong website

A website can be a powerful marketing tool. Some priorities:

• Make sure customers can find you. Get expert advice to improve your search engine ranking.
• Make the website fast and user-friendly. Get outsiders to test the site without prompting and fix what frustrates or baffles them.
• Include credibility-enhancing Frequently Asked Questions, Customer feedback, or Projects Completed sections. People often browse a website to build their confidence in your business before they buy.
• Include social media buttons to help readers spread the word.
• Encourage people to sign up for a newsletter in return for a discount or other incentives.
• Give people a reason to return by featuring hot deals and new information on the home page.

5. Use low-cost promotions first

Try the low-cost tactics first.

Direct mail and telemarketing can still be cost-effective for higher-priced services or products. Small-scale runs can give you an indication of demand and allow you to experiment with different options.

Blogs and profiles on social media such as business-focused LinkedIn or people-focused Facebook and Twitter are valuable ways to develop conversations with customers or potential customers.

If you are new to social media, research online etiquette first.

6. Start with a splash

If you just started, can you come up with some newsworthy event or gimmick to launch your business with a splash? Study how other companies launch. Can you do better? If you can't afford to hire a PR firm, ask a retired journalist with media contacts to help you put together some press releases.

The media are always hungry for good stories. Some innovative thinking can lead to free publicity in the local media.

7. Build a client database

A good client database is worth gold. It is easier and cheaper to sell more to existing customers than it is to find new customers. Start capturing customer information (with their permission) from day one and decide what details you need to include to help you build repeat business.

For example, you can record what customers hired you for, how much they spend, and when their purchases of services are likely to need renewal.

Your database will help you build a complete profile of your customer types, so you can focus on finding more people like your best clients.

8. Network vigorously

Business is all about people. The more people you know, the better, so try to get out there and meet others in the community. Join your industry or professional association and local organization such as small business networks, the chamber of commerce, and community groups. We are highly recommended by locals here.

9. Focus on referrals

Word-of-mouth referrals are the most cost-effective way of gaining new customers because you don't have to spend anything on advertising or marketing. Research has repeatedly shown that referrals have a higher conversion rate (inquiries to sales) and spend more than other customers. People have more confidence in a business recommended by friends or colleagues.

Referrals will happen naturally if you provide excellent service and good value, but you can improve your referral rate through an active program of incentives.

10. Measure to improve

Give preference to marketing you can measure to avoid the mistake of many businesses who don't measure marketing results. You may be talked into some radio or newspaper ads, but if you don't measure what happens, you'll never know if your investment was wise or a waste.

Measuring can be anything from adding a clip-out coupon or code to asking customers, 'By the way, how did you find out about us?'

The results may surprise you but will also empower you to focus your marketing budget on what works.

Final thoughts

Focus on building and nurturing your construction business and personal relationships online, especially when you're in the "Hurry up" and "Wait" period. There are many things beyond our control, but Marketing your construction business, is one of the things we can take advantage of right now.

About The Author:

Sharie DeHart, QPA, is the co-founder of Business Consulting And Accounting in Lynnwood, Washington. She is the leading expert in managing outsourced construction bookkeeping and accounting services companies and cash management accounting for small construction companies across the USA. She encourages Contractors and Construction Company Owners to stay current on their tax obligations and offers insights on managing the remaining cash flow to operate and grow their construction company sales and profits to put more money in the bank. Call 1-800-361-1770 or sharie@fasteasyaccounting.com

This Podcast Is Episode Number 491, And It's About What Sets Your Construction Company Apart Let me start by saying it's good if you have competition. Indeed, competition pushes you to be innovative. It also means there's an established community for your services. If no one else is offering the service, there's a chance there's no market for it. But, have you always wondered how a small construction company like yours could stand out from the crowd and its competitors? Awareness of what others in your industry have developed and provided leads to a newfound motivation and belief in making an impactful difference, whether within your company or your community. The key to benefitting from the competition is knowing how to take on competitors. You measure your share in the particular segment you operate in and obsess about your immediate competition, just as contractors who did not market effectively did years ago.

But first, you need to step back and ask yourself these three key questions and make sure you answer them in a way that will define and liberate your construction company at the same time.

Ask Yourself:

What am I offering? New construction, remodeling, or service and repair?

Who is my competition? DIY, other contractors, money homeowners for a construction project?

What is my fundamental competency - Residential, Commercial, or both?

Challenging yourself is the key to answering these questions. Write your answers on paper or computer, sleep on them and then revisit them again and again until you get to the truth.

Define The Type Of Contracting You Offer And Who Is Your Competition

Be that homeowner doing a weekend project, Handyman Contractors, Remodel Contractors, Trade Contractors, and other contractors and House Builders. It may not be the same form, structure, and category that you operate. For example, Home Depot does not see itself competing in the building supply business but for a share of the home and commercial remodel and repair market.

This approach and behavior across the organization, too, saw themselves as fighting for a share of the building supply market.

Getting The Leads And Doing The Work Is Only Part Of The Answer

Not answering them and acting on the knowledge is one reason many construction companies shrivel and die. They focus on the wrong areas to innovate or improve. They focus on the wrong enemy and threat. As a result, they miss what they could be doing to succeed and prosper over time.

Here are three ways your small construction company can establish itself from competitors and stand out from the crowd:

1. Concentrate, then generate.

What separates wealthy contractors from poor contractors? They concentrate then generate.

Returning to the critical questions at the start, successful contractors know what type of contracting they are good at. SWOT Analysis is one tool used in strategic planning for construction companies to evaluate the Strengths, Weaknesses, Opportunities, and Threats involved in determining the particular target market.

Concentrate

Strengths - are projects that your construction company does exceptionally well and earns a higher than average gross margin that gives you an advantage over other contractors. What are they, and how can your construction contracting company expand on them?

Weaknesses - are projects your construction company does poorly at and breaks even or loses money. What are they, and how can your construction contracting company turn them into strengths?

Opportunities - are projects and markets not currently being served where your construction company can enter and turn them into strengths. Have you considered tapping into the "work-from-home" market during this time? Or commercial establishments looking to remodel to implement a better floor plan?

Threats - are elements outside your construction company that could cause trouble for you or your construction projects. What are they, and how can your construction contracting company turn them into opportunities?

A SWOT analysis will help you identify each of these characteristics for your business to understand better what you're doing well, what you could improve, and which external factors could affect your business.

Generate

Marketing is a science, not an art. Now that you've analyzed your SWOT, you laid the foundation by having a vision for what your Construction Company will be when you finish building it, you know who you are, and you know who your prime client is. You can quickly generate more leads than you can handle.

2. Give the client what they want and deliver an excellent service.

There's room enough in most industries for competition. While it's a good idea to know who you're against, your clients are your priority. Focus your efforts on providing goods and services meaningful to them, addressing their pain points, and improving their lives. Market yourself to make those aspects clear. Show them why you're the ideal company to hire for their project.

Large businesses have weaknesses. The bigger they are, the less personalized and responsive their service is. They market themselves to a broader audience and have to bring in more clients to cover their costs because their overhead is higher.

In this respect, your size is an advantage. Fewer customers mean more personal service. That opportunity for relationship building will entice customers looking for extra attention.

Examine what people love about your competitors but also what frustrates them. Build your construction business to address those gaps. If you find that something isn't working with your customers early on, don't be afraid to shift. Be innovative in responding to market changes and client demands. You'll have an easier time making that change early than once you're more fully established.

3. Put together a stellar team.

It is one thing to be a carpenter, plumber, electrician, framer, drywaller, painter, or any other master crafts person and quite another thing to own a construction company that performs those things while managing a business.

Many small contractors have friends in the same trade and work well. Remember that being on your own is okay because employees are not required to succeed in this industry. You could also work well with a group of Trade Contractors and complete the work seamlessly as a team effort.

On the other hand, you could be a one-person remodeler who may have unknowingly built a team by working with highly-skilled professionals. For instance, the person who did your company logo or the banker who helped you set up a business bank account—outsourcing a specialist to help you with the things you are not an expert on - like a Website/Social Media Manager to take care of your online presence does wonder for your Marketing without needing to hire in-house staff and do their payroll.

Of course, a financial advisor or a construction accountant who has been where you want to go and can guide you will benefit your construction business. Optimize your time and skills by doing what you love and do best, and outsource the rest to operate better and grow your construction company.

Final thoughts

We are big fans of optimizing instead of maximizing. We've developed strategies that take the least amount of effort in the least amount of time possible. By taking advantage of existing knowledge from your competitors, you can improve and build upon these as they are relevant for you and your type of construction business.

Knowing that you're different from what's already out there and why you are different makes you attractive to your target market. Be the contractor who will do whatever it takes to rise above owning a job and develop a construction business that will provide for themselves and their families for a lifetime.

About The Author:

Sharie DeHart, QPA, is the co-founder of Business Consulting And Accounting in Lynnwood, Washington. She is the leading expert in managing outsourced construction bookkeeping and accounting services companies and cash management accounting for small construction companies across the USA. She encourages Contractors and Construction Company Owners to stay current on their tax obligations and offers insights on managing the remaining cash flow to operate and grow their construction company sales and profits to put more money in the bank. Call 1-800-361-1770 or sharie@fasteasyaccounting.com

This Podcast Is Episode Number 490, And It's About How To Raise Your Prices: Value Over Price As prices continue to rise, you've likely noticed that your cost of doing business has increased as well. After all, the main point of any business is to make money, and you can't do that if you're no longer breaking even. It's inevitable in every industry – you must raise your prices to continue making a profit. Many factors decide how much to charge, all of which are dynamic. The rising cost of goods, inflation, and a changing market are just a few reasons why any small business has to reevaluate its rates regularly to stay competitive (and to stay in business). If you're overworked and overbooked, you're undercharging. People know your worth and are fighting for your time. It's time to increase your prices! Although there's a lot to consider when raising your rates, make a point to reevaluate every six months. Here are some tips on how to increase your prices and how to tell your customers.

• Accept that you have to do it

It's a daunting task to consider raising your prices, as the danger of losing customers will be front of mind. But the bottom line is this: you cannot deliver quality service if you're not charging enough. It's that simple. If you're spinning your wheels trying to make up for the difference, you'll lose customers anyway. You won't be able to deliver the excellent service you're known for if you're constantly overworked trying to find profits elsewhere. Raising your prices is part of doing business. It doesn't make good financial sense to swallow the cost to appease your customers. With that in mind, know that you're doing the right thing for yourself and your clients.

• Understand what's costing you more

At least once per year, consider what your business costs. Check which products or services are making money and which aren't. Then take it a step further and pinpoint the breakeven position for each area. You will then be able to decide how much more you need to make to be profitable and comfortable. Evaluate all avenues – supplies, staff wages, bills, rent and utilities, training, etc. Doing this regularly lets you see which areas cost you more over time. Those that cost you more will likely benefit from a price increase.

• Decide your approach

A blanket increase would make sense if costs went up across the board. However, if you find that only some of your services now cost more to operate, it might be a good idea to increase only those prices. Your customers will appreciate only the necessary cost increases being passed on.

• Gauge the satisfaction level of your current customers

If you know that your clients are happy and believe they're getting excellent service, they will be happy to continue paying for that. They won't bat an eye when you inform them of your increase. But, if they're not currently satisfied, a price increase will be an excellent excuse for them to leave. This isn't necessarily a bad thing–some of the lost profits from those customers leaving will be made up by the price increase to other customers. And clients that aren't happy could become long-term headaches for your company.

• Give a lot of warning

If you offer subscription programs (such as system inspections and routine maintenance for homeowners), email your client base three months before your planned increase to let them know your plans. State the reasons for you're raising your prices now. Emphasize that this change is necessary to continue delivering the high-quality service they're used to. Giving enough notice to your clients, so they have time to react and prepare shows you respect them. Send a personal message to long-time clients or ones that hold significant accounts. This shows them that you care about their reaction and gives you a chance to listen to their concerns.

• Keep the communication lines clear

Most clients will be OK with your price increase. Some will likely have questions, concerns, or even complaints. Focus on answering their questions. This isn't a hard sell – it's a discussion. Because you've done your research, your increase is completely justified. As you take the time to chat with your clients, they will come to understand this. Remember, you aren't asking their permission to increase your prices. You're letting them know of the decision to do so.

• Communicate your value

Don't be shy about bringing up what you've delivered in the past. By reminding them of the great service you've provided already, they're likely to come around. It's a great idea to provide options if they're still hesitant, but don't give away more than you can. For example, you could offer to keep their prices the same but trim the services included for that price. You can find a middle ground that works for both of you – alleviating their cost and your workload. Final thoughts Once you've researched and informed everyone, go ahead confidently with your price increase. You'll find that you can keep your customer base while keeping up with the increased cost of doing business. By doing so, you'll be able to continue providing your clients with excellent service. If you're already in regular contact with your clients, the conversation around rising prices will be much less awkward. Remember, the price is how much your clients are paying for your service, but the value has no monetary measurement; it's what the consumer believes your services are worth, and you are worth it. Contractors like you deserve to be wealthy because you bring value to other people's lives.

About The Author:

Sharie DeHart, QPA is the co-founder of Business Consulting And Accounting in Lynnwood, Washington. She is the leading expert in managing outsourced construction bookkeeping and accounting services companies and cash management accounting for small construction companies across the USA. She encourages Contractors and Construction Company Owners to stay current on their tax obligations and offers insights on how to manage the remaining cash flow to operate and grow their construction company sales and profits so they can put more money in the bank. Call 1-800-361-1770 or sharie@fasteasyaccounting.com

This Podcast Is Episode Number 489, And It's About Construction Company Employee Compensation And A Note On Taxes There are a few different methods that employers use to pay their employees, and while they may have similarities, they each also have implications for your construction business and employees. On top of that, there may be a blended model at play, in which you offer two types of compensation at once, such as a wage and bonuses. When paying employees, laws and the IRS have made the payroll function a time-consuming nightmare for the small business owner. Small business owners spend an average of eight hours monthly performing payroll functions. That's 12 full business days a year that could be spent generating sales, prospecting for new business opportunities, improving products or services, or servicing customers.

How you pay your construction employees will impact your finances and your reporting requirements. Read on to learn the differences between the main ways of earning money in the workplace.

Wages

Most entry-level positions offer an hourly wage in exchange for work. An hourly wage might be $20. So if the employee works 8 hours that day, they would be compensated $160 for that day.

The minimums set by law vary depending on where the business operates. Typically, the minimum wage is directly related to the cost of living in that area.

Generally, a set number of hours can be worked in a week, and working beyond that maximum entitles the employee to a higher pay rate. There may be premiums associated with working undesirable shifts or an even higher pay rate that employees are entitled to for working on holidays.

Because of the number of hours worked, the specific days worked, and overtime, the amount an employee will potentially earn each year can vary widely when paid with hourly wages.

Salary

A salary is the standard compensation for management and upper-level positions. It is an agreed-upon annual total, where a certain number of hours worked per week is expected – typically 35 to 40. Other requirements will be outlined, such as how many days per week are expected.

Depending on the schedule, the total salary is divided into equal payments for each pay period. Often, compensation is agreed to as an annual figure, with each paycheck equally divided by the number of payments. If you pay an employee a salary of $60,000 yearly once a month over 12 months, you will pay $5,000 each, not accounting for any deductions.

How a company manages its payment schedule will vary from company to company.

Other pay, such as overtime, commissions, or bonuses, are separate from salary. Many companies don't offer overtime pay for extra hours worked, but they may offer commissions or bonuses for performance.

Commission

This is a form of compensation that is based on performance. The amount an employee receives can vary drastically, depending on how well they perform in a pay period.

The commission is typically a calculated percentage of goods or services sold. It is meant as an incentive to drive employees to make sales. For example, you may offer to pay $100 as a commission for each deal closed. An employee selling ten service subscriptions in the pay period would receive a $1,000 commission.

All earnings made by commission are counted as taxable income.

Some salaried or hourly positions offer a commission on top of regular earnings. However, some positions, especially those in sales, can be based solely upon commission. This means that employees don't get paid if they don't sell anything.

Bonuses

A bonus is a compensation type that is not guaranteed. It is usually tied to some company goal, driven by sales or performance. A bonus might be awarded individually or to a team or other work group.

The idea behind a bonus is to create an incentive to meet a specific goal. It is rewarded when the goal has been reached or evaluated at particular times. Bonuses are offered on top of a wage, salary, or commission.

Because of the unofficial structure, bonuses are loved by some and loathed by others. It can be motivating to receive a bonus, as it's completely separate from what an employee already earns. However, it can also leave employees feeling disgruntled if they feel they weren't supported well enough to reach the goal and missed out on the bonus. If the goals are unrealistic, employees may also struggle with motivation even if they are offered a bonus.

Some construction company owners usually decide by the end of the year if their employees deserve a Holiday or Year-End Bonus.

The key questions to ask yourself:

• Can I afford to give a bonus?
• Can I afford to provide a reward for my employees?
• Do I want to give a bonus to each of my employees?
• How do I decide how much Bonus I should give?
• Reality Check: Is bonus taxable?

Starting with the last question: In most cases, it may be taxable. All income is subject to State, Federal Payroll Taxes and is part of the employee's W-2. All forms of income, including bonuses, are income to your employee.

The most common is to give your employee a set amount known as a 'Net Check". It would not seem the same to say, "here is your bonus for $200.00," but the actual check received is $169.04. Your employee will think you are tacky and cheap, and you can afford to give them a Big Bonus.

Instead, you give the employee a check for $200.00, and the company pays all the payroll taxes. The bonus value is much higher when a check is grossed up (meaning you, the employer, pay all the taxes, company half, employee half of Social Security, Medicare, Federal Withholding, State, and Local Taxes).

Final Thoughts

We know that when it comes to compensation and payroll service, no one size fits all. Whatever payment structure your construction company follows, ensure you are consistent and fair as an employer and obey all applicable laws. We offer payroll solutions that meet your business's needs and enable you to spend time doing what you do best - running your company.

As we have been where you are now, we know that as construction business owners, you are selling your time first and your skill second. Your time as the contractor is the most valuable, so I hope you are doing tasks that only you can do. Contact us to learn more about different forms of compensation and what they mean for your bottom line.

About The Author:

Sharie DeHart, QPA is the co-founder of Business Consulting And Accounting in Lynnwood, Washington. She is the leading expert in managing outsourced construction bookkeeping and accounting services companies and cash management accounting for small construction companies across the USA. She encourages Contractors and Construction Company Owners to stay current on their tax obligations and offers insights on how to manage the remaining cash flow to operate and grow their construction company sales and profits so they can put more money in the bank. Call 1-800-361-1770 or sharie@fasteasyaccounting.com

This Podcast Is Episode Number 488, And It's About Ways To Get Rid Of Construction Accounting And Bookkeeping Confusions Doing something different is hard. Do you feel like everyone else is the most brilliant person in the room, and you just don't get it? Getting into a rut and repeatedly doing the same things is easy. If those things work, then yes, continue to do them repeatedly. The problem is when something is not working, and you continue down the same path expecting a different result. The opposite of too much change can create another form of chaos. How do you know what is broken if you change a zillion things all at once? Looking for ways to make your job easier is the goal of all construction contractors. The last thing you want to hear from your staff or a trade contractor is, "Do you want me to do that over?" Your answer is "No!" (thundered, with many extra words). What you expected was that your staff did it correctly the first time.

In accounting, the first piece of the confusion comes from Construction Accounting Vs. Regular Accounting. Not everyone knows what construction accounting is, and easy to assume all accounting is the same.

Why is there confusion? From a tax standpoint, most construction projects are all lumped together, and after the Cost of Good Sold, Expenses, and Depreciation, you either made money or didn't. The Tax Accountant rolls up the numbers to compete for the annual tax return. Therefore, if the information is not needed to be broken down for taxes, then the Tax Accountant is not concerned.

As the Construction Contractor paying the bills, you are constantly concerned about which jobs are "Making Money or Losing Money." "Why does it seem like I am watching the money fly by and zooming out of my checking account? It never seems like there is any money left over!"

Second, confusion always comes about the material. A construction contractor may purchase material and resell it to their customer. Thereby thinking it is a reimbursable expense. (You lose money when doing this).

Remember all invoices to the Customer (Retail, General Contractor, Spec Builder, Developer) are income. Every line item on a customer invoice is All INCOME. If the words are on the invoice, then the invoice is either taxable or non-taxable based on other factors. Washington State, for instance, has a clear explanation.

Purchases for the material are Cost of Goods Sold or are expenses if you are short-cutting your accounting. I have seen financial statements that are backed out because they will reflect reimbursable income as a negative number and thereby show it as a deduction. (The net effect is double dipping on the expense side) The cause is the accounting software not correctly set up.

New Construction Home Building is another area of confusion. In the mind of many construction contractors, a Spec home is any new house being built for resale. That is true; it is a New Construction House. It is a Spec Home for the Owner and Developer (who might be the General Contractor running the job). The question is on the construction accounting side.

The question to be answered is "Who owns the house?" - It is a Spec House in the accounting system for the owner. For the General Contractor who is building a New Construction Home for a Developer, it is NOT a Spec Home. Why might it seem the same as both are New Construction Houses?

If the General Contractor Does Not Own the house, then from an accounting side for that specific General Contractor, the house is a Custom Home with an owner who is not The General Contractor.

Recognize expenses when the house sells. If the General Contractor, Developer Owns the new House being built, then it is a Spec House in the Accounting System. All costs roll up into WIP (Work-In-Process) and convert to COGS when the house is sold, not before. Otherwise, expenses one year; sales the next equals taxes.

In Washington State:

• All Construction Contractors working for a Spec Builder must collect sales tax on all services (labor and material) when billed from the General and Trade Construction Contractors.

• All Construction Contractors working on Custom homes, Residential or Commercial Projects, Large or Small Remodels, and Handyman Projects can accept reseller permits from the General Contractor. Sales Tax is billed and collected from the Owner by the General Contractor.
• Contractors must collect sales tax on all retail projects, including Labor, Materials, Other. Sales tax must be collected on every line item. Customer Discounts can be given for any reason.

Fix the giant boulders one at a time. Get that one thing working, then move on to the next one. What is the most annoying thing you can quickly fix? We talk about accounting because that is our primary focus.

Start with the basics:

• Open a business checking account.
• Use a dedicated credit card for the business (if using a personal card).
• Create invoices, present them to your customer, collect the money and get it in the bank (Do you have an easy way for your clients to pay you?).
• Collect the money ASAP because, without cash flow, you are out of business.

No - the company with the most Accounts Receivable or Accounts Payable does not win a prize.

• Accounts Receivable means your customers owe you money.
• Accounts Payable means you owe money to your suppliers.
• Net Profit is the money left over. You want lots of Net Profit!
• You are not a banker! Stop borrowing money using your credit cards, Loans, and Lines of Credit, then finance customers' projects at 0% interest.

Final thoughts

Money makes the business world go round. Unless you provide a service that others are willing to pay for, you will not collect money to use for goods and services you want. It costs you money when you have uncollected Accounts Receivable. A grocery store will not let you run a tab or give them an IOU for milk.

Fast Easy Accounting does the bookkeeping, accounting, and payroll and offers business coaching for small, brand-new Construction Contractors, General Contractors, Trade Contractors, and Handymen across the USA, including Alaska and Hawaii. Do the parts only you can do; leave the rest to us.

You are never too small for us to help, and we can help to begin with your first day in business. We are looking forward to being of assistance. Schedule your free consultation here.

About The Author:

Sharie DeHart, QPA is the co-founder of Business Consulting And Accounting in Lynnwood, Washington. She is the leading expert in managing outsourced construction bookkeeping and accounting services companies and cash management accounting for small construction companies across the USA. She encourages Contractors and Construction Company Owners to stay current on their tax obligations and offers insights on managing the remaining cash flow to operate and grow their construction company sales and profits so they can put more money in the bank. Call 1-800-361-1770 or sharie@fasteasyaccounting.com

This Podcast Is Episode Number 487, And It's About Five Effective Ways To Retain Employees And Keep Your Company Healthy Traditionally, employers have relied on giving employees raises to retain their staff and reward them for being hard-working and loyal. Raises can get expensive, and there is often an upper limit for what you can offer regarding increasing salaries and wages. Keeping your employees happy makes business sense. You want to keep your good employees, and it costs money to find, hire and train new staff. Beyond that, satisfied employees who feel valued are more motivated and productive. Here are some ways to keep your employees happy that don't rely on higher salaries.

1. Pay for professional development

Good employees want to improve their skills and grow professionally. Often, other priorities get in the way of upgrading skills. Paying for professional development, for example, by having a fund people can access or by bringing in experts to run workshops, shows your staff you care enough to invest in them. Meanwhile, your construction business benefits by having staff trained on the newest procedures and technologies.

An employee's development plan is an action plan that focuses on helping staff improve their knowledge, capabilities, and skills in areas related to your business.

Creating such plans shows your staff you're invested in their future, which increases employee satisfaction. It helps them understand their role and gives them a framework for expanding their talents. It enables you to develop your staff, promoting from within and encouraging your employees to grow with your construction company.

2. Encourage work-life balance

Employees want a fulfilling life, but finding a balance between work and home isn't easy. Having an employer that encourages a work-life balance makes it more accessible. Avoid messaging (texting, phoning, or emailing) employees after work hours and clarify that people should enjoy their personal time. Encourage employees to take their sick leave and use their vacation days. Be a role model by striving for work-life balance yourself.

3. Be transparent

Being open and honest with your workers fosters a sense of trust and belonging among your staff. Have regular meetings where you discuss your organization's goals, strengths, and challenges and receive input and feedback from your team. This encourages engagement and shows your workers that their perspective is valuable.

4. Having a set of values that applies to your staff

Sometimes organizations create noble values that they apply to their customers but don't apply to their workers. Employees see clients and customers being treated well but then wonder why those values don't apply to them. Create a set of values that applies to your staff. Set out how you want your team to feel. Do you want them to feel valued? Supported? What does that look like in your organization?

5. Ask your staff what they need

It's challenging to come up with solutions that everyone will find meaningful. Ask your staff what would be valuable to them–and what would make them happy enough to stay. For example, they may be pleased with additional vacation days or more banked sick time. Listen to their suggestions and consider whether any options they mention could work for your organization.

Final thoughts

Nobody likes to feel like a cog in the machine. Anything could be going on behind closed doors. There are, of course, expectations to meet in every job. However, employers would do well to remember that everyone working for them has an entire life outside the company. A construction company that supports and shows compassion to its contractors is likelier to keep the good ones from burning out.

While increasing salary is one thing you can do to keep your employees happy, there are other things they may value that you can offer. Employee development plans are a great way to invest in your employees, keep them motivated, and help them acquire new skills that will help them in their careers. It also enables you to promote from within your construction company, saving you time and money in the long run.

About The Author:

Sharie DeHart, QPA is the co-founder of Business Consulting And Accounting in Lynnwood, Washington. She is the leading expert in managing outsourced construction bookkeeping and accounting services companies and cash management accounting for small construction companies across the USA. She encourages Contractors and Construction Company Owners to stay current on their tax obligations and offers insights on managing the remaining cash flow to operate and grow their construction company sales and profits to put more money in the bank. Call 1-800-361-1770 or sharie@fasteasyaccounting.com

This Podcast Is Episode Number 486, And It's About Are You Charging Enough? Why You Should Raise Your Prices

There comes a time for every small business to raise its prices. While it may seem scary, remember that it's your job to keep costs fair for you and your customers. That means you have to charge prices that work for you and allow you to remain in business.

Am I Not Charging Enough?

Knowledge leads to profits and cash flow. What makes knowledge powerful? Use of knowledge. In this cutthroat construction industry, you may not be able to outgrow your competition forever, but you can always outlearn them.

Knowing The 80/20 Rule For Construction Contractors will surely help:

• 20% of your customers typically generate 80% of your net profit
• 20% of the goods or services you sell contribute 80% of your revenue
• 20% or 2 out of 10 of your staff create 80% of the value for your customers

The frightening consequence of the 80/20 rule is that 8 out of 10 hours we spend at work drive almost no value to the bottom line, and the most significant drain is trying to save money doing our contractor bookkeeping instead of reviewing the Key Performance Indicator (KPI) Reports.

The essential value good bookkeeping brings to a business is an understanding of where your 20% is hidden.

By generating daily reports that uncover the best clients, jobs, services, or products, you will soon see how you can refocus your internal efforts on doing more good work.

You could be asking the same question and still looking for reasons why you should raise your prices:

1. Your costs have grown

The thing about inflation is that everyone will feel the pinch – including you. If your construction business supplies are now more costly, you must pass those costs on. Otherwise, you're losing money, and your business will be on the hook.

Nobody likes raising prices on their customers, but it's a necessity. You have to be able to cover your costs and continue supplying your customers with what they expect.

2. You're too busy

If you find that you're consistently booked 10-14 days out, it's a sign that you're delivering good value for money. People know your worth and are fighting for your time. That's great! But it also means that your service-based business has evolved.

This tells you that your customers are satisfied. And if they're happy, they'll likely spend more on your services. You may lose some clients in the process, and that's okay. You're now attracting higher-quality clients who know your value and are glad to pay more.

Beware of getting carried away, however. If you raise your prices by too much too fast, without adding any value, you'll find yourself in trouble. As your skills improve, you'll automatically provide more value for money. This is when raising your prices is justified and will be met with acceptance.

3. Enough time has passed

Even without adding more value or skills, raising your prices is okay. It's recommended. A good general rule of thumb is to increase your costs by 5-10% every year and a half or so.

This may sound like a lot, but consider that the average inflation rate falls within this bracket. If you don't raise your rates and the cost of your supplies hasn't gone down, you're losing money.

4. Your competitors are doing it

Yes, it feels great to offer your customers a fantastic deal. But don't be the one left with rock bottom prices when your peers have all raised theirs. This translates into you working harder to earn the same amount of money.

Be aware of what's going on in your industry and adjust. Customers judge a business based on perceived value. If you're at the bottom of the pack price-wise, they're likely to skip over you to get a good deal. Price yourself accordingly to attract quality clients.

5. You've become more valuable

You gain more skills, experience, and knowledge as you work in your field. This translates to more value. If your business is better than it was a year ago, it's time to charge accordingly.

Don't undervalue yourself. Customers often understand that you're more skillful and are glad to pay for your extra expertise.

6. You're trying to rebrand or reposition your service

There may come a time when you want to attract more high-quality, higher-paying clients.

This rebranding is meant to raise the perceived value and the prices along with it. One of the most prominent examples where you see this is in the restaurant industry. As a place becomes more sought after, you'll notice that they change the menu to make the descriptions more detailed. Maybe a popular item will change its name to make it sound fancier. But one thing's certain – the price tag will have gone up.

Final thoughts

There are many reasons why raising your prices is a good idea. It's just good business sense. Likely you're experiencing a combination of the reasons listed above. Whatever the case, ensure you do your research and review your prices often to make sure you position your business correctly.

As contractors like you move away from gut-level decisions and begin relying on their construction accounting systems to provide valuable financial and job costing reports, it's time you open a treasure chest busting at the seams with helpful information which can lead you to earn massive profits and by extension increase your wealth exponentially. Now, the power lies within you and what you can do with your knowledge.

About The Author:

Sharie DeHart, QPA is the co-founder of Business Consulting And Accounting in Lynnwood, Washington. She is the leading expert in managing outsourced construction bookkeeping and accounting services companies and cash management accounting for small construction companies across the USA. She encourages Contractors and Construction Company Owners to stay current on their tax obligations and offers insights on how to manage the remaining cash flow to operate and grow their construction company sales and profits so they can put more money in the bank. Call 1-800-361-1770 or sharie@fasteasyaccounting.com